Builders Inc

Builders Inc. entered into a contract to build a state-of-the art warehouse for Smith and Company for $18,000,000. Midway through the project, a dispute arose. fte dispute has not delayed the project; however, the dispute could affect the overall cost by $100,000. Builders Inc. uses the percentage-of¬completion method to account for its long-term contracts. Because of the dispute, Builders should:

A) revise its estimates, recompute previous years' income and file amended returns for each year
B) revise its estimates and base all subsequent income determinations on the new estimates
C) reduce income in the year the dispute arose
D) reduce income in the year the project is completed