A Construction Firm Was Contracted to Build a Bridge for $100

question 60

Multiple Choice

A construction firm was contracted to build a bridge for $100 000 000.It is estimated that the total cost will be roughly $95 000 000 spread over five years,but it is unable to estimate reliably the yearly percentage of completion.Under the completed contract method,what amount of profit will be recorded in Year 2?

• A)$5 000 000
• B)$0
• C)$1 000 000
• D)none of the above

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Definitions:

Partnership

An unincorporated business form consisting of two or more persons conducting business as co-owners for profit.

Corporation

A legal entity that is separate and distinct from its owners, who are shareholders; it has its own rights, privileges, and liabilities independent of its shareholders.

American Red Cross

A humanitarian organization that provides emergency assistance, disaster relief, and education inside the United States.

Accounting Records

Documents and books that keep track of all financial transactions of an entity.