104k views
5 votes
JRE2 Incorporated entered into a contract to install a pipeline

for a fixed price of $2,365,000. JRE2 recognizes revenue upon
contract completion. Cost incurred Estimated Cost to Complete 2023
$ 272,0

2 Answers

7 votes

Final answer:

This question is about a business contract involving JRE2 Incorporated and the installation of a pipeline.

Step-by-step explanation:

The subject of this question is Business and the grade level is College.

JRE2 Incorporated entered into a contract to install a pipeline for a fixed price of $2,365,000. The revenue from this contract will be recognized upon completion of the project. The estimated cost to complete in 2023 is $272,000. This information is important for financial analysis and tracking the progress of the project.

User Jhedmendoza
by
7.5k points
3 votes

JRE2 Incorporated would recognize a total profit of $1,619,000 for the project at the end of the year 2023

How to solve

Total revenue to be recognized upon completion of the project:

Total Contract Price = $2,365,000

Costs incurred in 2023 = $272,000

Estimated remaining costs in 2023 = $202,000

Total Costs to Date = Costs incurred + Estimated remaining costs

Total Costs to Date = $272,000 + $202,000

Total Costs to Date = $474,000

Total Revenue to be recognized = Total Contract Price - Total Costs to Date

Total Revenue to be recognized = $2,365,000 - $474,000

Total Revenue to be recognized = $1,891,000

Therefore, the total revenue to be recognized upon completion of the project in 2023 is $1,891,000.

To calculate the total profit or loss:

Total Profit or Loss = Total Revenue recognized - Total Costs incurred

Total Profit or Loss = $1,891,000 - $272,000

Total Profit or Loss = $1,619,000

Therefore, JRE2 Incorporated would recognize a total profit of $1,619,000 for the project at the end of the year 2023.


The Complete Question

JRE2 Incorporated undertook a project to install a pipeline for a fixed contract price of $2,365,000. The company recognizes revenue upon completion of the contract. As of the end of the year 2023, JRE2 has incurred costs of $272,000 for the project. The estimated remaining costs to complete the project in 2023 are $202,000.

Calculate the total revenue to be recognized upon completion of the project in 2023.

Determine the total profit or loss that JRE2 Incorporated would recognize for the project at the end of the year 2023.

User Pramesh
by
8.0k points