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

question 58

Multiple Choice

Gleason Construction enters into a long-term fixed price contract to build an office building for $26,000,000. In the first year of the contract, Gleason incurs $6,000,000 of cost and the engineers determined that the remaining costs to complete are $14,000,000. How much revenue should Gleason recognize in Year 1 assuming the use of the zero-gross -profit approach?

• A) $6,000,000
• B) $26,000,000
• C) $0
• D) $14,000,000

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Definitions:

Right of Survivorship

A legal principle in joint ownership where the surviving owner(s) automatically inherit the share of a deceased owner.

Executor

An individual appointed in a will to manage the deceased's estate, responsible for settling debts and distributing assets to beneficiaries.

Per Capita

A distribution of property in which each member of a group shares equally.

Predecease

To die before another person, often used in the context of wills and inheritances.