Assume That Funtime Corp -
If Funtime Uses the Percentage of Completion to Playground

question 75

Multiple Choice

Assume that Funtime Corp. has agreed to construct a new playground for Durrey County for $2,300,000. Construction of the new playground will begin on March 17, 2012 and is expected to be completed in August 2013. At the signing of the contract Funtime Corp. estimates that the it will cost $1,600,000 to build the playground.
At the end of 2012 Funtime provided the following information about the project:
$\begin{array}{llcc}& \text {Costsincurred } & \text {Estimated costs } \\\underline{ \text { Year} }& \underline{\text {to date } } & \underline{\text { remaining} }\\2012&\$1,000,000&\$800,000\\\end{array}$
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If Funtime uses the percentage of completion to recognize revenue on the long-term contract how much gross margin should Funtime recognize in 2012?

• A) $389,200
• B) $278,000
• C) $556,000
• D) $0

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Definitions:

Ex-Dividend Date

The specific date on which shares traded no longer come with the right to receive the most recently declared dividend.

Total Wealth

The complete value of an individual's or entity's assets minus liabilities.

Reverse Split

A reduction in the number of a company's shares outstanding that increases the share price proportionately.

Stock Dividend

A stock dividend is a dividend payment made to shareholders in the form of additional shares rather than a cash payout, affecting the shareholder's portion of company ownership but not the total value of ownership.