Gleason Construction Enters into a Long-Term Fixed Price Contract to Build

question 122

Multiple Choice

Gleason Construction enters into a long-term fixed price contract to build an office building for $20,000,000.In the first year of the contract Gleason incurs $6,000,000 of cost and the engineers determined that the remaining costs to complete are $10,000,000.How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the percentage-of-completion method?

• A)$1,000,000 profit
• B)$1,000,000 loss
• C)$1,500.000 profit
• D)$1,500,000 loss

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