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:

Recurrence

The act of occurring again, especially after a certain period or due to specific circumstances.

Escape Learning

A behavioral phenomenon where an individual learns to perform a behavior to terminate or avoid an unpleasant situation or stimulus.

Social Learning Theory

A theory that proposes individuals learn new behaviors and information by observing others, emphasizing the importance of cognitive processes in learning.

Correct Behavior

Actions or responses that are deemed appropriate within a given context, often aligning with societal, ethical, or professional standards.