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onedaycpa2010
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Newbie

Joined: 10 May 2010
Location: United States
Online Status: Offline
Posts: 8

Posted: 16 May 2010 at 10:32 \| IP Logged

Hey,

Becker Book Class exercise f2-page 31

why the current year groos profit in the 3rd year is $800 loss

They way i understand it is as follow:

Year 3 and 4 loss , when you have a loss the % of comp is 100%.

If you recorded in prior profit you now deduct that ie add it to the loss, if you have loss it carries over and you record only balance loss.

Am I right or am i right :-)

Thank You

OrDieTryng!
Regular
Regular

Joined: 30 Mar 2010
Online Status: Offline
Posts: 130

Posted: 16 May 2010 at 14:01 \| IP Logged

I'm not sure what you're asking. It sounds like you answered your own
question:

"why the current year groos profit in the 3rd year is $800 loss"
"If you recorded in prior profit you now deduct that ie add it to the loss"

It seems like you understand why you have an $800 loss in year 3 (total
loss 800 = contract loss of 200 + reversal of previously-recognized gain
of 600). And then in year 4 you have an additional loss of 100 because
costs went up another 100.

So losses are recorded as follows: year 3=800 (200+600) and year
4=100.

Which part exactly are you not understanding?

__________________
FAR: 84 Becker
REG: 95 Becker
BEC: 88 Becker
AUD: 88 Gleim

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