ACTG 351 HW #1 Answers 1. Curtiss Construction Company, Inc. entered into a fixed-price contract with Axelrod Associates on July 1, 2011, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,000,000. The building was completed on December 31, 2013. Accumulated contract costs incurred, estimated costs to complete the contract, accumulated billings to Axelrod and cash collections from Axelrod under the contract are as follows: 12/31/2011 $350,000 3,150,000 720,000 600,000 12/31/2012 $2,500,000 1,700,000 2,170,000 1,800,000 12/31/2013 $4,250,000 0 3,600,000 3,600,000
Costs incurred to…show more content… Same setup, just replace 400,000 in place of the 600,000 Therefore: 200,000*GP = 400,000 – 1,000,000(1-GP) 600,000 = 800,000GP GP = .75 Gross profit recorded for each contract = $150,000
3. Gift Card Assignment Accounting for gift cards is still a relatively new area of accounting with little authoritative guidance. Please read the following article about accounting for gift cards: http://www.journalofaccountancy.com/Issues/2007/Nov/AccountingForGiftCards.htm
Please find a recent (last three years) annual report of any publicly traded retailer that you suspect would have gift card accounting. Find the appropriate section in the accounting policies where they describe their revenue recognition and print out their description of accounting for gift cards. Determine if the company’s disclosure provides the following information and answer the following questions: 1. What is the amount of gift card revenue recognized for the year? 2. What is the amount of gift card liability at the end of the year? 3. Where is the gift card liability located on the balance sheet (e.g., deferred revenue, other accrued liabilities)? 4. How much gift card breakage was recorded during the year? What percentage of net income was the breakage? 5. Where did the company record the gift card breakage (e.g., revenue, other income)? 6. How does the company determine when to recognize gift card breakage? Please bring your printed disclosure to class with
