Algae Builds Large Ships and Uses the Percentage of Completion

question 15

Multiple Choice

Algae builds large ships and uses the percentage of completion method of revenue recognition. The following information pertains to the construction contracts it had in place as of its December 31, 2021 year-end. $$\begin{array} { | l | r | r | } \hline & 2020 & 2021 \\\hline \text { Cost incurred to date } & 200 \text { million } & 400 \text { million } \\\hline \text { Costs to complete contracts } & 600 \text { million } & 600 \text { million } \\\hline \text { Total price of contracts outstanding at } & & \\\text { December } 31,2021 & 1,300 \text { million } & 1,300 \text { million } \\\hline\end{array}$$ How much revenue will Algae recognize in 2020?

• A)$260 million
• B)$325 million
• C)$433 million
• D)$1,300 million

Learn the optimal group sizes for different types of teamwork and meetings.

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Definitions:

Enolate

An ion formed by the deprotonation of an alpha carbon of a carbonyl compound, involved in many important organic reactions.

Carbonyl

A functional group characterized by a carbon atom double-bonded to an oxygen atom (C=O).

Pka Values

A quantitative measure of the strength of an acid in solution, representing the acid dissociation constant logarithmically.

Equilibrium

A state in a chemical reaction where the rate of the forward reaction equals the rate of the reverse reaction, leading to constant concentrations of reactants and products.