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Halo

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Chapter 5 Income Measurement and Profitability Analysis

exercises

Exercise 5-1

Requirement 1 Year Income recognized 2011. $250,000 ($400,000 - 150,000) 2012. – 0 – 2013. – 0 – 2014. – 0 – 2015. – 0 – Total $250,000

Requirement 2

| | | | |
|Year |Cash Collected |Cost Recovery(37.5%) |Gross Profit(62.5%) |
|2011 |$100,000 |$ 37,500 |$ 62,500 |
|2012 | 75,000 |28,125 | 46,875 |
|2013 | 75,000 | 28,125 | 46,875 |
|2014 | 75,000 | 28,125 | 46,875 |
|2015 | 75,000 | 28,125 | 46,875 |
| Totals |$400,000 |$150,000 |$250,000 |
| | | | |

Requirement 3

| | | | |
|Year |Cash Collected |Cost Recovery |Gross Profit |
|2011 |$100,000 |$100,000 | - 0 - |
|2012

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