Suppose That, in 2010, Indiana Incurred Costs of $63

question 80

Multiple Choice

Suppose that, in 2010, Indiana incurred costs of $63.75 million and estimated an additional $42.75 million in costs to complete the project. Using the percentage-of-completion method, Indiana:

• A)Recognized $3.75 million loss on the project in 2010.
• B)Recognized $5.25 million gross profit on the project in 2010.
• C)Recognized $7.5 million gross profit on the project in 2010.
• D)None of these is correct.The project is 70% complete after 2010 (i.e., $99.75 million costs to date/ $142.5 million estimated total costs).The estimated gross profit is now $7.5 million (i.e., $150 million $142.5 million), so gross profit to date is $5.25 million.$9 million was recognized in 2009, so a $3.75 million loss is recognized in 2010.

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