Exhibit 17-1
The following information relates to a project of the Cumberland Construction Company: The contract price was $1,200,000. Cumberland uses the cost-to-cost method of revenue recognition.
-Refer to Exhibit 17-1. What amount of revenue would be recognized in 2016?
A) $400,000
B) $192,000
C) $136,000
D) $0

Question

Exhibit 17-1
The following information relates to a project of the Cumberland Construction Company:  The contract price was $1,200,000. Cumberland uses the cost-to-cost method of revenue recognition.
-Refer to Exhibit 17-1. What amount of revenue would be recognized in 2016?
A) $400,000 
B) $192,000 
C) $136,000 
D) $0

Quizplus · Accepted Answer

Based on the information provided, without seeing Exhibit 17-1, the general principle for revenue recognition according to the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) is that revenue is recognized when it is earned and realizable, regardless of when the cash is received. The specific choice (B) $192,000 suggests that it was calculated based on criteria met for revenue recognition within the year 2016, possibly through percentage of completion, delivery of goods or services, or another method that matches revenue with the period it was earned in. Without the details of Exhibit 17-1, the explanation is based on general accounting principles for revenue recognition.

Exhibit 17-1 The Following Information Relates to a Project of the Cumberland