Robin Construction Company Began a Long-Term Contract in 2016

question 59

Multiple Choice

Robin Construction Company began a long-term contract in 2016.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 2016 was $350,000.The contract was completed in 2017 and the cost incurred that year was $125,000.Under the percentage of completion method:

• A)Robin should report $300,000 of income in 2016.
• B)Robin should report $90,000 of income in 2017.
• C)Robin will receive interest (under the lookback method)on the underpayment of taxes in 2016.
• D)Robin should report $325,000 of income in 2016.
• E)None of the above is correct.

---

Definitions:

Pessimists

Individuals who tend to see the worst aspect of things or believe that the worst will happen.

Dissociative Amnesia

A psychological disorder characterized by memory loss that cannot be explained by ordinary forgetfulness, often related to traumatic events.

Hypnosis

A trance-like state of focused attention, reduced peripheral awareness, and heightened suggestibility.

Suggestibility

The quality of being inclined to accept and incorporate the ideas, thoughts, or beliefs of others, often leading to a change in behavior or perspective.