Use the Following Information for Questions

question 68

Multiple Choice

Use the following information for questions.
In 2012, Fargo Corporation began construction work under a three-year contract.The contract price is $2,400,000.Fargo uses the percentage-of-completion method for financial accounting purposes.The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract.The financial statement presentations relating to this contract at December 31, 2012, follow:

-What was the initial estimated total income before tax on this contract?

• A)$300,000
• B)$320,000
• C)$400,000
• D)$480,000