On January 1, Year 1, Big Co. enters into a contract with a customer to build a bridge on the customer's land for $2,500,000. The construction of the bridge is expected to be completed at the end of Year 3. Big determines that the progress toward completion of the bridge is reasonably measurable using the input method based on costs incurred. At contract inception, Big estimates that the expected total cost of construction will be $1,700,000. Below are the (1) actual costs incurred during each year, (2) expected costs to complete the construction, and (3) amounts billed to the customer:

Question

Yusuf

Business

28 November, 08:21

On January 1, Year 1, Big Co. enters into a contract with a customer to build a bridge on the customer's land for $2,500,000. The construction of the bridge is expected to be completed at the end of Year 3. Big determines that the progress toward completion of the bridge is reasonably measurable using the input method based on costs incurred. At contract inception, Big estimates that the expected total cost of construction will be $1,700,000. Below are the (1) actual costs incurred during each year, (2) expected costs to complete the construction, and (3) amounts billed to the customer:

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Johanna Humphrey · Answer 1

By the end of Year 3, the entire $2,500,000 of revenues should be recognized.

I don't have enough information about cost incurred p/year

Explanation:

In this contract, revenue is recognized over time based on progress toward completion. The progress toward completion is measured using the input method based on costs incurred.

The construction was completed in Year 3.

By the end of Year 3, the entire $2,500,000 of revenues should be recognized.