2 2 0 1 7 | P A G E 3 | JOHN WILEY AND SONS, INC. 2 2...
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Page: 109
Total estimated gross profit on the contract would be ($11,250,000 – $10,000,000) = $1,250,000, so
25% of this amount, or $312,500, is recognized as gross profit the first year. Also, during the year the
company billed the customer $2,250,000 and received $1,875,000 in payments.
Page: 111
The current-period loss (based on the example above) is calculated in Figure 1A-42, continuing from the
long-term construction contract illustration previously discussed.
Figure 1A-42 Computation of Recognizable Loss in Current Period
$5,000,000
$4,315,680
Cost to date (12/31/Year 2, assuming $2,500,000 was incurred in Year 2)