Use the Following Information for Questions

question 247

Multiple Choice

Use the following information for questions. Tuba Ltd.began work in 2014 on a contract for $1,250,000.Other data are: Revenue Recognition 6 - 19
-Beaver Builders Ltd.is using the completed-contract method for a $2,000,000 contract that will take two years to complete.Data at December 31, 2014, the end of the first year, are: The gross profit or loss that should be recognized for 2014 is

• A)$50,000 gross profit.
• B)$25,000 gross profit.
• C)$25,000 loss.
• D)$ 0.

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Definitions:

Depreciation

The accounting process of allocating the cost of tangible assets over their useful lives, reflecting wear and tear, or obsolescence.

Capital Gain/Loss

The profit or loss made from selling an asset for more or less than its purchase price.

Depreciates

The process by which an asset loses value over time, often due to wear and tear, age, or obsolescence, impacting its useful life.

Straight Line

A method of calculating depreciation of an asset which assumes equal annual depreciation over the asset's useful life.