Construction Co Lays Railroad Track and Enters into a Contract

question 15

Multiple Choice

Construction Co lays railroad track and enters into a contract with Railroad to replace a stretch of track for a fixed fee of €100,000. All work in process is the property of Railroad. Construction Co has replaced 75 units of track out of 100 total units of track to be replaced by year end. The effort required of Construction Co is consistent across each of the 100 units of track to be replaced.
Construction Co determines that the performance obligation is satisfied over time, as Railroad controls the work in process asset being created.
Construction Co should recognise revenue totalling:

• A) €100,000.
• B) €75,000
• C) €25,000
• D) €175,000

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Definitions:

Incoterm

A set of predefined commercial terms published by the International Chamber of Commerce relating to international commercial law.

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The strategic process of managing the acquisition of raw materials and goods on a global scale to reduce costs and ensure quality.