Exhibit 18-1 in 2010, Alpha Construction Began Work on a Contract

question 19

Multiple Choice

Exhibit 18-1 In 2010, Alpha Construction began work on a contract with a price of $850, 000 and estimated costs of $595, 000.Data for each year of the contract are as follows:
$\begin{array}{llll}&2010&2011&2012\\\text { Costs incurred chring the year } & \$ 238,000 & \$ 319,600 & \$ 105,000 \\\text { Estimated costs to complete } & 357,000 & 139,400 & -0- \\\text { Partial billings } & 260,000 & 210,000 & 380,000 \\\text { Collections } & 240,000 & 200,000 & 410,000\end{array}$


-Refer to Exhibit 18-1.Under the percentage-of-completion method of revenue recognition, the net amount reported for construction in progress inventory at the end of 2011 would be

• A)$ 87, 600
• B)$189, 600
• C)$210, 000
• D)$312, 000

---

Definitions:

Price Level

An indicator of the mean cost of commodities and services within an economy at a specific point in time.

Natural Rate of Output

The level of production achieved when the economy is operating at its full employment level, without excessive inflation.

Recession

A noticeable drop in economic activity affecting the entire economy, enduring for longer than several months, and commonly observed in metrics such as real GDP, real income, employment, industrial output, and wholesale-retail transactions.

Aggregate Demand

Whole demand for goods and services across an economic landscape, appraised at a given overall price point throughout a defined timeframe.