Robin Construction Company Began a Long-Term Contract in 2010

question 35

Multiple Choice

Robin Construction Company began a long-term contract in 2010.The contract price was $600,000.The estimated cost of the contract at the time it was begun was $450,000.The actual cost incurred in 2010 was $300,000.The contract was completed in 2011 and the cost incurred that year was $180,000.Under the percentage of completion method:

• A)Robin should report $300,000 of income in 2010.
• B)Robin should report a $30,000 loss in 2011.
• C)Robin must pay interest (under the look-back method)on the overpayment of taxes in 2010.
• D)Robin should report $60,000 profit on the contract in 2011.
• E)Robin will receive interest (under the look-back method)on the overpayment of taxes in 2010.

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Definitions:

Nasopharynx

The region of the pharynx that sits above the soft palate and is connected to the nasal cavities, playing a role in respiration and speech.

Parietal Pleura

The outer layer of the pleura that lines the inner wall of the thoracic cavity.

Visceral Pleura

A thin membrane that closely covers the lungs' outer surface, part of the double-layered pleura of the thoracic cavity.

Parietal Peritoneum

The outer layer of the peritoneum that lines the abdominal wall.