Robin Construction Company Began a Long-Term Contract in 2017

question 1

Multiple Choice

Robin Construction Company began a long-term contract in 2017. The contract price was $800,000. The estimated cost of the contract at the time it was begun was $500,000. The actual cost incurred in 2017 was $350,000. The contract was completed in 2018 and the cost incurred that year was $125,000. Under the percentage of completion method:

• A)Robin should report $300,000 of income in 2017.
• B)Robin should report $90,000 of income in 2018.
• C)Robin will receive interest (under the lookback method) on the underpayment of taxes in 2017.
• D)Robin should report $325,000 of income in 2017.
• E)None of the above is correct.

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Definitions:

Organizational Change

Organizational change involves the process through which companies modify major components of their operations, structures, or strategies to address internal or external opportunities or challenges.

Customer Feedback

Information coming directly from customers about the satisfaction or dissatisfaction they feel with a product or a service, often used for improvement and adjustments.

Offshoring

The practice of relocating company operations or functions to another country to reduce costs or access skilled labor.

Multinational Corporation

A company that operates in multiple countries, managing production or delivering services in more than one country.