Eminem Methods: Completed contract, percentage, installment, and cost recovery

Related BrainMass Solutions

• Intermediate Accounting Discussed

  ANSWERS Income is recognized when accounting for long term contracts by using two methods. One is the completed contract method and another is the percentage of completion method.

• compute the revenue to be recognized

  When the following conditions are met: --> either installment method --> or cost recovery method may be used.

• Trump construction & Land Salvage Company - installment sale

  409212 Trump construction & Land Salvage Company - installment sales and long term contract accounting Problem Land Salvage Company deals in distressed properties and makes high risk sales.

• Percentage of Completion / Installment Method

  Gross Profit for each year = Cash Collected X Gross margin percentage The solution explains the calculations using the percentage of completion method and the installment method.

• Contractor determines that a contract will result in an overall loss

  When a contractor determines that a contract will result in an overall loss, when should that loss be recognized within the completed-contract and percentage-of-completion methods?

• Short Answer Journal Entries & Income / Balance Statements

  $630,000 ($600,000 + $64,000 - $34,000) This solution illustrates how to determine the purchase amount, cost of goods sold amount, cash collected, and revenues under the percentage-of-completion, completed contract, and installment sales methods.

• Accounts Receivables Pension Liability

  In this case, the entire expected loss should be deferred and recognized when the contract is completed, regardless of whether the percentage-of-completion or completed-contract method is employed.

• Installment-Sales Method and Cost-Recovery Method

  2007 100000 25000 2007 100000 50000 0 2008 60000 15000 2008 60000 0 10000 2009 40000 10000 2009 40000 0 40000 Total 200000 50000 Total 200000 50000 The expert examines installment sales method and the cost-recovery methods.

• Silva Company: Partial balance sheet installment method

  Prepare a partial balance sheet as of year-end 2011 and 2012 listing the items related to the installment sale applying each of the three methods listed. (delivery revenue recognition, Installment sales method and cost recovery method).