Yes! Thank you. I just watched this before an interview at a real estate company tomorrow. If I get the job this would have been the best 11minutes spent in 2018 thus far
I love the way these videos are presented I have a intermediate accounting final in 10 days and this video helps out a lot. I feel that you do a fantastic job explaining vs my professor which can be a little confusing at times.
I usually would make 2 different entries to close out. Debit CIP for 4,000,000 Debit Cont Exp for 16,000,000 Credit Rev for 20,000,000 then close out accounts with the following BIllings debit for 20,000,000 CIP credit for 20,000,000 would this be wrong? or is it acceptable. Obviously you would be increasing CIP by the 4mil profit for a brief second until you zero it out but it was always easier for me to remember. Thanks
I prefer the completed contract method over the percentage of completion method for long term contracts. I think revenue should be recognize only after the construction project is done. That's just my preference.
It’s an assumption. Initially costs would be estimated to be X for a 3 year contract but as time passes the estimates are adjusted as the contract progresses. The instructor is focusing on the mechanics of the adjustments.
I believe its a contra asset used simply to make the entries work instead of crediting revenue. crediting rev. would acknowledge the rev immediately on the income statement, which you wouldn't want to do on the percentage of completion method.
Billings is a contra asset account to CIP. Remember that CIP gets carried on your balance sheet as part of your Inventory. If Billings exceeds CIP, then that difference will be carried on your balance sheet as a liability instead of an inventory asset. That happens because you have actually billed more money than what you've delivered as part of the contract, therefore you have a liability.
I appreciate the explanation! I just wish you went over how Income statement and balance sheet would look like with the accounts
Yes! Thank you. I just watched this before an interview at a real estate company tomorrow. If I get the job this would have been the best 11minutes spent in 2018 thus far
did you get it?
I love the way these videos are presented I have a intermediate accounting final in 10 days and this video helps out a lot. I feel that you do a fantastic job explaining vs my professor which can be a little confusing at times.
Best of luck!
@@Edspira thank you so much.
I'm using this to study for FAR. Thank you so much!
Best of luck!
your videos are so excellent. I am a international student and I can understand your explanation completely. thank you !!
It's great to hear this. Best of luck in your studies!
I usually would make 2 different entries to close out.
Debit CIP for 4,000,000
Debit Cont Exp for 16,000,000
Credit Rev for 20,000,000
then close out accounts with the following
BIllings debit for 20,000,000
CIP credit for 20,000,000
would this be wrong? or is it acceptable. Obviously you would be increasing CIP by the 4mil profit for a brief second until you zero it out but it was always easier for me to remember.
Thanks
He did not go at this detail level. You are correct.
You might have just saved me sir. Thank You!
Is That billing account an asset or a liability?
awesome video! Thanks
you're the best thank you
I prefer the completed contract method over the percentage of completion method for long term contracts. I think revenue should be recognize only after the construction project is done. That's just my preference.
i am in love with your videos thx alot
thank you
No problem! Best wishes
Thanks!
What about losses?
thanks
No problem!
Sir plz i dnt get how increase estimated cost in 2018 n 2019.brief me reasons
It’s an assumption. Initially costs would be estimated to be X for a 3 year contract but as time passes the estimates are adjusted as the contract progresses. The instructor is focusing on the mechanics of the adjustments.
It's better
helpfully
Thanks!
What kind of account is billings?
I believe its a contra asset used simply to make the entries work instead of crediting revenue. crediting rev. would acknowledge the rev immediately on the income statement, which you wouldn't want to do on the percentage of completion method.
Yes actually what is billings account ? As Mr. Rick said it should be a contra account but why don't we use the CIP?
Billings is a contra asset account to CIP. Remember that CIP gets carried on your balance sheet as part of your Inventory. If Billings exceeds CIP, then that difference will be carried on your balance sheet as a liability instead of an inventory asset. That happens because you have actually billed more money than what you've delivered as part of the contract, therefore you have a liability.