ACCT2102 _Intermediate Financial Accounting 1

Ch.5 Revenue

Assignment Question:
P 5-10 Long-term contract; revenue recognition over time
In 2018, the Westgate Construction Company entered into a contract to construct a road for
Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the
contract is as follows:

Westgate recognizes revenue over time according to the percentage of completion.

Required:
1. Calculate the amount of gross profit to be recognized in each of the three years.

2. Prepare all necessary journal entries for each of the years (credit “various accounts” for
construction costs incurred).

3. Prepare a partial statement of financial position for 2018 and 2019 showing any items related
to the contract.

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