In Year 1,a Contractor Agrees to Build a Building for $2,500,000

question 28

Multiple Choice

In Year 1,a contractor agrees to build a building for $2,500,000 by the end of Year 2.The builder's cost is estimated to be $1,800,000.The actual costs for Year 1 are $900,000 and Year 2's actual costs are $1,100,000.Under the percentage of completion method Year 1's gross profit is

• A)$0.
• B)$300,000.
• C)$350,000.
• D)$700,000.

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Definitions:

Negotiation

A process of discussing issues openly and attempting to reach a joint decision or agreement.

Risk-Averse

The tendency to prefer avoiding losses over achieving equivalent gains.

Risk-Seeking

A behavioral trait of preferring or choosing options that have potentially higher gains albeit with higher risks.

Framing

The way information or situations are presented or structured to influence perception and understanding.