Nautilus Resources is investing in a new heavy oil

upgrader #3921
Nautilus Resources is investing in a new heavy oil upgrader in northern Alberta. Nautilus has
hired Rite Build Contractors to construct the facilities. The contract price is $3,600 million to be
completed over four years. The following information pertains to this construction
contract.Required:a. Compute the amount of revenue and expense to be recognized in the
accounts of Rite Build Contractors in each of the four years. Show computations in tabular
format in a spreadsheet.b. Prepare all the journal entries required in Year 1.c. Prepare the
journal entry required in Year 4 to close the accounts related to the project.d. If Rite build were
to underestimate the cost to complete to be S940 million instead of $1,140 million in Year 3,
how much gross profit or loss would be recognized in each year? How much more or less gross
profit or loss would be reported in that year? How much more or less gross profit would be
reported in Year 4, and in total for all four years?View Solution:
Nautilus Resources is investing in a new heavy oil upgrader

ANSWER
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