Pool Contractors (PC)entered into a Contract to Build a Solar

question 8

Multiple Choice

Pool Contractors (PC) entered into a contract to build a solar heated swimming complex for $1,800,000. Construction commenced on July 1, 2011, with a planned completion date of December 31, 2013. A summary of the related accounting information is provided below: How much gross profit would be recognized in fiscal 2012 if PC uses the percentage of completion method?

• A)$50,000
• B)$100,000
• C)$130,000
• D)$180,000

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Definitions:

GAAP

Generally Accepted Accounting Principles; the standard framework of guidelines for financial accounting used in any given jurisdiction.

Market Value

The current price at which an asset or service can be bought or sold in a fair and open market.

Bond Interest Expense

The cost incurred by an entity for the interest due on its issued bonds over a specific period.

Carrying Value

The net amount at which an asset or liability is recognized in the balance sheet, taking into account factors like amortization, impairment, and depreciation.