Hiser Builders, Inc

question 78

Multiple Choice

Hiser Builders, Inc.is using the cost-recovery method for a $5,600,000 contract that will take two years to complete.Data at December 31, 2012, the end of the first year, are as follows:
The gross profit or loss that should be recognized for 2012 is

• A)$0.
• B)a $240,000 loss.
• C)a $120,000 loss.
• D)a $105,600 loss.

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Definitions:

Depreciation Expense

The distribution of a physical asset's cost over its lifespan to account for depreciation or becoming outdated.

Building

A structure with a roof and walls, such as a house, school, or factory, constructed as a place for people to live, work, or carry out activities.

Adjustment

A change made to a financial record to correct or update the information.

Supplies

Items used in the operation of a business that are not directly associated with the products or services being sold, such as office supplies.