The Following Data Are Available from a Company for a Long-Term

question 84

Essay

The following data are available from a company for a long-term construction contract: $\begin{array}{|l|l|l|l|}\hline & 2006 & 2007 & 2008 \\\hline \text { Construction costs incurred to date } & \$ 400,000 & \$ 1,600,000 & \$ 1,900,000 \\\hline \text { Estimated costs to completion } & 1,400,000 & 450,000 & \\\hline\end{array}$ The contract price for the three-year contract was $2,100,000 and the estimated cost at the beginning of the contract was $1,800,000.
(a) What is the amount of income that will be reported under the percentage-of-completion method in 2006?
$
(b) What is the amount of income that will be reported under the percentage-of-completion contract method for 2007?
$
(c) What is the amount of income that will be reported under the percentage-of-completion contract method for 2008?
$

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Definitions:

Maslow's Hierarchy

A theory in psychology proposed by Abraham Maslow, structured as a pyramid with basic needs at the base and self-actualization at the top, illustrating human motivational drivers.

Safety Needs

As part of Maslow's hierarchy of needs, these are fundamental requirements for security and protection from physical and emotional harm.

Basic Trust

A term often associated with Erik Erikson's stages of psychosocial development, referring to the first stage where an infant's sense of security and trust in the world is developed.

Oral Sensory Stage

The first stage in Freud's psychosexual development, occurring in the first year of life, where pleasure centers on oral activities like sucking.