During 2007, Frank Corp. started a construction job with a total contract price of $2,800,000. It was completed on December 15, 2008. Additional data are as follows: 2007 2008 Actual costs incurred in current year $1,080,000 $1,220,000 Estimated remaining costs 1,080,000 — Billed to customer 960,000 1,840,000 Received from customer 800,000 1,920,000 Under the completed-contract method, what amount should Frank recognize as gross profit for 2008? Group of answer choices 500,000 $250,000 $180,000 $380,000
During 2007, Frank Corp. started a construction job with a total contract price of $2,800,000. It was completed on December 15, 2008. Additional data are as follows:
2007 2008
Actual costs incurred in current year $1,080,000 $1,220,000
Estimated remaining costs 1,080,000 —
Billed to customer 960,000 1,840,000
Received from customer 800,000 1,920,000
Under the completed-contract method, what amount should Frank recognize as gross profit for 2008?
The completed contract technique recognizes all revenue and profit connected with a project only when it is completed. When the collection of cash owed from a customer under the terms of a contract is questionable, this strategy is employed. This method produces the same results as the percentage of completion method, but only once a project is finished. This procedure provides no meaningful information to the reader of a company's financial statements until it is completed. The delay in income recognition, on the other hand, permits a company to postpone the payment of corresponding taxes.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
