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

question 70

Multiple Choice

Camey Construction enters into a long-term fixed price contract to build an office building for $8,000,000. In the first year of the contract Camey incurs $1,000,000 of cost and the engineers determined that the remaining costs to complete are $2,200,000. Camey billed $1,700,000 and collected $1,400,000 in Year 1. Refer to Camey Construction. How much gross profit should Camey recognize in Year 1 assuming the use of the percentage-of-completion method? (Do not round intermediary calculations, and round your final answer to the nearest whole dollar.)

• A) $1,500,000
• B) $531,250
• C) $7,000,000
• D) $8,000,000

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Definitions:

Disjunctive Syllogism

A form of logical reasoning where, from two possibilities, the elimination of one implies the necessity of the other.

Valid Argument

A logical conclusion based on premises that are true and follows a form that guarantees its truth.

Educated Mind

A mind that has acquired knowledge and intellectual skills through learning and study.

Aristotle

An ancient Greek philosopher and polymath, whose writings covered a wide range of subjects and significantly influenced Western philosophy and science.