In 2020, Pop Construction Corp Pop Uses the Percentage-Of-Completion Method

question 55

Multiple Choice

In 2020, Pop Construction Corp. began work on a contract for $ 3,700,000. Other details follow: $\begin{array}{llcc}&\underline{2020}\\ \text {Costs incurred during the year } &\$1,800,000 \\ \text { Estimated costs to complete as of December 31 } &1,200,000\\ \text {Billings during the year } &1,650,000\\ \text { Collections during the year } &975,000\\\end{array}$

Pop uses the percentage-of-completion method. For calendar 2020, Pop should report gross profit of

• A) $ 150,000.
• B) $ 420,000.
• C) $ 700,000.
• D) $ 2,220,000.

---

Definitions:

Salvage Value

The calculated revenue an asset will generate upon being sold after its effective life span has passed.

Depreciation Expense

The allocated amount of an asset’s cost over its useful life, representing wear and tear, decay, or obsolescence.

Prepaid Subscriptions

Prepaid subscriptions are payments made in advance for services or products to be received in the future, often resulting in a liability for the company until the service period has occurred.

Subscription Expense

Recurring costs associated with subscribing to a service or product on a regular basis.