Sanderson Construction entered into a long-term construction

jagguarpaw January 12, 2017 0 Comments

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Question: On June 15, 2016, Sanderson Construction entered i…

On June 15, 2016, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $390 million. The expected completion date is April 1, 2018, just in time for the 2018 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Costs incurred during the year                               $60           $130        $70

Estimated costs to complete as of December 31   190            60          —

Required:

Determine the amount of revenue, cost, and gross profit or loss to be recognized in each of the three years under IFRS, assuming that using the percentage-of-completion method is not appropriate. (Enter your answers in millions.)

2016       2017      2018

Revenue                                                     ?              ?          ?

Cost                                                            60          130          70

Gross Profit (loss) to be recognized      ?             ?             ?