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.