Hiser Builders, Inc The Gross Profit or Loss That Should Be Recognized for $9,800,000

question 123

Multiple Choice

Hiser Builders, Inc. is using the completed-contract method for a $9,800,000 contract that will take two years to complete. Data at December 31, 2015, the end of the first year, are as follows: $\begin{array}{lr}\text { Costs incurred to date } & \$ 4,480,000 \\\text { Estimated costs to complete } & 5,740,000 \\\text { Billings to date } & 4,200,000 \\\text { Collections to date } & 3,500,000\end{array}$ The gross profit or loss that should be recognized for 2015 is

• A) $0.
• B) a $420,000 loss.
• C) a $210,000 loss.
• D) a $184,800 loss.

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Definitions:

Seasoned Equity Offering

The process by which a publicly-traded company issues additional shares of stock to raise capital, typically after the initial public offering.

Initial Public Offering

The first time that the stock of a private company is offered to the public.

Secondary-market Transaction

The buying and selling of previously issued securities, such as stocks and bonds, among investors without involving the issuing companies.

Block Transactions

Large-scale securities trades on stock markets, usually involving at least 10,000 shares or bonds.