Question

At the beginning of 2019, Florida Road Construction entered into a contract to build a road for the government. Construction will take 4 years. The following information as of 31 December 2009 is available for the contract:

1. Total revenue according to contract $10,000,000
2. Total expected cost $8,000,000
3. Cost incurred during 2009 $1,200,000
Assume that the company estimates percentage complete based on costs incurred as a percentage of total estimated costs. Under the completed contract method, how much revenue will be reported in 2009?
A. None.
B. $300,000.
C. $1,500,000.

Answer 1

A. None

Step-by-step explanation:

A is correct because Under the completed contract method, no revenue would be reported until the project is completed.