Using the Following Information, Decide for Which of the Following

question 40

Multiple Choice

Using the following information, decide for which of the following the completed contract method may be used.Assume the taxable year is the calendar year in all cases.

• A)A contract to construct a bridge estimated to be completed in 18 months; the contractor has average annual gross receipts of $15 million.
• B)A contract signed on October 1 to build the residence of John Smith; it is estimated that it will take six months to complete the job.The contractor has gross receipts of $15 million.
• C)A contract to construct a highway estimated to be completed in 36 months; the contractor has average annual gross receipts of $9 million.
• D)More than one of the above.

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Definitions:

Economic Slowdown

A period of reduced economic activity and growth rates compared to previous periods.

Net Profit

The amount of money that remains from revenues after all operating expenses, taxes, and costs have been subtracted; a key indicator of financial health.

ACP

Accelerated cost recovery system, a method used for calculating depreciation expenses for tax purposes.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a specified period, indicating operational efficiency.