When There Is a Significant Increase in the Estimated Total

question 1

Multiple Choice

When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct?

• A) Under both the percentage-of-completion and the completed-contract methods, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.
• B) Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.
• C) Under the completed-contract method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.
• D) No current period adjustment is required.

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Definitions:

Immobile

Incapable of moving or being moved.

Moderate-intensity

A level of physical activity or exercise that raises the heart rate and induces sweating while allowing an individual to maintain a conversation.

Muscle Tone

The continuous and passive partial contraction of the muscles, or the muscle's resistance to passive stretch during resting state.

Physical Activity

Physical activity encompasses any bodily movement produced by skeletal muscles that requires energy expenditure, including activities undertaken while working, playing, traveling, and engaging in recreational pursuits.