12. Beaver Co., a construction firm, enters into a contract to buila a dam for a customer. The contract price is total construction costs plus 20% thereof. However, the variable fee increases to 25% if the project is completed within three years. Beaver Co. incurs the following costs: 20x1 20x2 20x3 Costs incurred each year 10,500,000 14,300,000 6,000,000 Estimated costs to complete 19,500,000 6,200,000 In 20x1, it is not highly probable that the additional fee will be received. However, after a change in circumstances in 20x2, it is now highly probable that the additional fee will be received. Beaver Co. uses the percentage of completion method based on costs. How much profit is recognized in 20x3? c. 1,200,000 d. 1,500,000 a. 850,000 b. 980,000
12. Beaver Co., a construction firm, enters into a contract to buila a dam for a customer. The contract price is total construction costs plus 20% thereof. However, the variable fee increases to 25% if the project is completed within three years. Beaver Co. incurs the following costs: 20x1 20x2 20x3 Costs incurred each year 10,500,000 14,300,000 6,000,000 Estimated costs to complete 19,500,000 6,200,000 In 20x1, it is not highly probable that the additional fee will be received. However, after a change in circumstances in 20x2, it is now highly probable that the additional fee will be received. Beaver Co. uses the percentage of completion method based on costs. How much profit is recognized in 20x3? c. 1,200,000 d. 1,500,000 a. 850,000 b. 980,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education