For a Construction Firm Using the Completed-Contract Method,if Costs Exceed

question 9

Multiple Choice

For a construction firm using the completed-contract method,if costs exceed billings on some contracts by $1,000,000 and billings exceed costs by $800,000 on others,the contracts should ordinarily be reported as a

• A) current asset of $200,000.
• B) current liability of $200,000.
• C) current asset of $1,000,000 less a contra-current asset of $800,000.
• D) current asset of $1,000,000 and a current liability of $800,000.

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Definitions:

Initial Impairment Assessment

The first step in evaluating whether an asset's carrying amount exceeds its recoverable amount, indicating a potential impairment loss.

Intangible Asset

An asset that lacks physical substance but is identifiable and provides economic benefits to the owner, such as patents, trademarks, and copyrights.

Internal Recordkeeping

The process of maintaining all company records, including financial documents, employee information, and operational logs, primarily for internal use.

Business Combination

A transaction in which an acquirer gains control over one or more businesses.