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

question 30

Multiple Choice

Gleason Construction enters into a long-term fixed price contract to build an office building for $30,000,000. 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 $18,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the completed-contract method?

• A) $4,000,000 loss
• B) $2,000,000 profit
• C) $0 profit
• D) $266,667 loss

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Definitions:

Home Headquarters

The primary operational location or main office of a company, usually where key decisions are made.

Trainability

The capacity of an individual to learn new skills or adapt to new conditions and tasks through training.

Desired Level

The specific goal or benchmark that an individual or organization aims to achieve within a certain timeframe.

Third-Country Nationals

Individuals who are working in a country other than their own and the home country of the company they work for.