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

question 63

Multiple Choice

Tullis Construction enters into a long-term fixed price contract to build an office tower for $10,700,000. In the first year of the contract Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete the project are $5,000,000. Tullis billed $4,000,000 in year 1 and collected $3,500,000 by the end of the end of the year. How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?

• A) liability of $1,000,000
• B) asset of $1,000,000
• C) asset of $500,000
• D) liability of $500,000

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Definitions:

Surviving Sibling(s)

Brothers or sisters who remain alive after one has died, often facing unique emotional and familial challenges.

SIDS

A seemingly well infant less than one year old may experience an unexplained fatality, commonly during sleep, known as Sudden Infant Death Syndrome.

SIDS Deaths

Sudden Infant Death Syndrome refers to the unexplained death of a seemingly healthy baby, typically during sleep, in their first year of life.

Adult Children

Individuals who are legally adults but are considered children in relation to their parents or guardians.