Robin Construction Company Began a Long-Term Contract in 2015

question 78

Multiple Choice

Robin Construction Company began a long-term contract in 2015.The contract price was $800,000.The estimated cost of the contract at the time it was begun was $500,000.The actual cost incurred in 2015 was $350,000.The contract was completed in 2016 and the cost incurred that year was $125,000.Under the percentage of completion method:

• A)Robin should report $300,000 of income in 2015.
• B)Robin should report $90,000 of income in 2016.
• C)Robin will receive interest (under the lookback method) on the underpayment of taxes in 2015.
• D)Robin should report $325,000 of income in 2015.
• E)None of the above is correct.

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