This Year,a Contractor Agrees to Build a Building for $2,000,000,which

question 111

Multiple Choice

This year,a contractor agrees to build a building for $2,000,000,which will be completed by the end of next year.The builder's cost is estimated to be $1,700,000.The actual costs this year are $800,000 and next year's actual costs are $800,000.If the tax rate is 20% and the interest rate is 10%,the look back interest for the percentage of completion method is

• A)$ 0.
• B)$1,176.
• C)$2,000.
• D)$6,000.

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Definitions:

Market Return

Market return refers to the total return on investment from a market index, which includes dividend payments and capital gains or losses.

Interest Semiannually

The payment of interest two times per year on a loan or bond.

Bond Covenant

Legal agreements between bond issuers and bondholders that specify terms and conditions to protect the interests of both parties.

Sinking Fund

A savings fund accumulated over time for the specific purpose of paying off a debt or replacing a capital asset in the future.