For a Construction Contract Where the Company Uses the Percentage

question 21

Multiple Choice

For a construction contract where the company uses the percentage of completion method and there is a change in the estimated total cost of the contract from 12 million to 13 million, the accountant should do the following:

• A)Use the average cost of 12.5 million.
• B)Compute the percentage completed using the new cost total if the company uses the cost ratio to estimate percentage completed.
• C)Use estimated costs determined at the beginning of the contract, not actual costs to date.
• D)Use retrospective treatment.