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

question 103

Multiple Choice

Camey Construction enters into a long-term fixed price contract to build an office building for $5,000,000. In the first year of the contract Camey incurs $1,400,000 of cost and the engineers determined that the remaining costs to complete the project are $2,500,000. Camey billed $4,000,000 and collected $1,000,000 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? (Round any intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole dollar.)

• A) $394,900
• B) $2,600,000
• C) $525,000
• D) $1,400,000

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Definitions:

External Perspective

Viewing a situation or problem from an outside viewpoint, often to gain new insights or understand broader implications.

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