Use the information below to answer the following questions:
The percentage of completion profit for a particular project of Redgate Ltd was $200 000 for year 1 and $220 000 for year 2 (completion).
-What difference would there be to the total profit for the two years if the completion of production method were used?
A) Profit would be $200 000 higher.
B) Profit would be $420 000 higher.
C) Profit would be $420 000 lower
D) There would be no difference.

Question

Quizplus · Accepted Answer

The completion of production method recognizes profit only when the project is completed. Since the project was completed in year 2, the total profit recognized would be the same $420,000, just all in year 2, with no difference in total profit over the two years.

Use the Information Below to Answer the Following Questions