Luke's Construction Receives a Contract to Build a Bridge for $6

question 63

Multiple Choice

Luke's Construction receives a contract to build a bridge for $6 000 000,with an estimated cost of $4 000 000.Over the three-year construction period,the costs are estimated to be $500 000 in Year 1,$3 200 000 in Year 2 and $300 000 in Year 3.How much construction revenue would be reported in Year 2 using the percentage of completion method?

• A)$2 300 000
• B)$2 800 000
• C)$4 800 000
• D)$3 200 000

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Definitions:

Due Diligence

A comprehensive appraisal or investigation undertaken to evaluate the risks and merits before entering into an agreement or transaction.

Failure Analysis

The process of collecting and analyzing data to determine the cause of a failure, often with the goal of preventing it in the future.

Troubleshooting Report

A troubleshooting report documents the process of diagnosing and resolving problems with equipment, software, or systems, outlining the steps taken and solutions found.

Justification Reports

Documents written to explain the reasoning behind a decision or recommendation, often including evidence and analysis.