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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Definitions:

SEC

The Securities and Exchange Commission, a U.S. federal agency responsible for regulating the securities industry and protecting investors.

Accounting Profession

This refers to the field involving the measurement, processing, and communication of financial and non-financial information about economic entities such as businesses and corporations.

EDGAR

The Electronic Data Gathering, Analysis, and Retrieval system used by the U.S. Securities and Exchange Commission (SEC) for the submission of documents.

SEC

The Securities and Exchange Commission (SEC) is a U.S. government agency responsible for regulating the securities markets and protecting investors.