Tullis Construction Enters into a Long-Term Fixed Price Contract to Build

question 57

Multiple Choice

Tullis Construction enters into a long-term fixed price contract to build an office tower for $15,000,000. In the first year of the contract. Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $3,800,000 in year 1 and collected $3,300,000 by the end of the end of the year. Refer to Tullis Corporation. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?

• A) liability of $800,000
• B) asset of $800,000
• C) asset of $500,000
• D) liability of $500,000

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Definitions:

Osteogenesis Imperfecta

A genetic disorder characterized by fragile bones that break easily, often with little or no apparent cause.

Scoliosis

A lateral curvature of the spine, which is normally straight when viewed from behind.

Treatment Option

Various methods or pathways available for the diagnosis, management, and care of health conditions.

S-shaped Curvature

A type of spinal deformity characterized by a lateral, S-like curve.