Use the Following Information for the Following Questions:
Hemsworth Ltd

question 76

Multiple Choice

Use the following information for the following questions:
Hemsworth Ltd. began work in 2020 on a contract for $ 960,000. Other details follow:
$\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad\quad \underline{2020}\quad \quad\quad \quad\underline{2021}$
$\text{Costs incurred during the year}\ldots \ldots \ldots \ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots \ldots \ldots \ldots\$160,000\quad \quad\$490,000$
$\text{Estimated costs to complete as of December 31}\ldots \ldots \ldots \ldots \ldots \ldots \ldots\ldots \ldots480,000\quad \quad0$
$\text{Billings during the year }\ldots\ldots \ldots \ldots \ldots\ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots \ldots \ldots \ldots 180,000\quad \quad720,000$
$\text{Collections during the year}\ldots\ldots \ldots \ldots \ldots\ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots \ldots \ldots 150,000\quad \quad975,000$
-Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are: $\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad\quad \quad \quad\quad \quad\quad \quad\quad\quad \quad\quad \underline{2020}\quad \quad\quad \quad\underline{2021}$
$\text { Costs incurred to date }\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots\ldots \ldots \$540,000\quad\quad \$335,000$
$\text { Estimated costs to complete as of December } \ldots \ldots \ldots \ldots \ldots \ldots360,000\quad\quad-$
$\text { 31 Billings to date}\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots420,000\quad\quad 1,250,000$
$\text { Collections to date} \ldots \ldots \ldots\ldots\ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots \ldots\ldots \ldots \ldots 300,000\quad\quad1,000,000$
If Classical uses the percentage-of-completion method, the gross profit to be recognized in 2020 is

• A) $ 450,000.
• B) $ 210,000.
• C) $ 200,000.
• D) $ 100,000.

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Definitions:

Assignability

The capability of a contract or right to be transferred from one party to another.

Contractual Obligations

Refers to the legally enforceable promises and duties that parties agree upon in a contract.

Legal Restrictions

Laws or regulations that limit or regulate certain activities or behaviors in order to protect public interest.

Negative Emotions

Feelings that are unpleasant or undesirable, such as sadness, anger, or fear.