A construction company recognizes revenue from construction contracts over time using the input method based on costs incurred. It reports the following: Construction costs Estimated cost to complete at year- end O $550 The contract price is $1,000. What is the profit recognized in Year 2? O $800 O $150 Year 1 $100 300 O $400 Year 2 $200 0

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.