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

question 71

Multiple Choice

Gleason Construction enters into a long-term fixed price contract to build an office building for $27,000,000. In the first year of the contract Gleason incurs $8,000,000 of cost and the engineers determined that the remaining costs to complete are $25,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the completed-contract method?

• A) $6,000,000 loss
• B) $6,000,000 profit
• C) $0
• D) $19,000,000 loss

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Definitions:

Ex-Dividend

A stock trading term that denotes the timing of dividend payments – if you purchase a stock on its ex-dividend date or after, you will not receive the next dividend payment.

Declared Dividend

A portion of a company's earnings announced to be paid to shareholders on a specified date.

Homemade Dividend Policy

A strategy where investors create their own dividend stream by selling a portion of their portfolio of equities.

Dividend Policy

Refers to the approach or guidelines a company follows in deciding the amount and timing of dividend payments to its shareholders.