Upton Company has consistently used the percentage-of-completion method of recognizing income. In 2010, Upton started on an $18,000,000 construction contract that was completed in 2012. The following information was taken from Upton's 2010 accounting records:

What amount of revenue should Upton recognize on the contract in 2010?

Question

Upton Company has consistently used the percentage-of-completion method of recognizing income. In 2010, Upton started on an $18,000,000 construction contract that was completed in 2012. The following information was taken from Upton's 2010 accounting records:

What amount of revenue should Upton recognize on the contract in 2010?

Quizplus · Accepted Answer

According to the percentage-of-completion method, revenue recognition is based on the proportion of work completed. In this case, Upton has completed 30% of the contract in 2010 ($5,400,000 ÷ $18,000,000 = 0.30). Therefore, Upton should recognize 30% of the total revenue on the contract in 2010, which is $6,000,000 (0.30 x $18,000,000).

Upton Company Has Consistently Used the Percentage-Of-Completion Method of Recognizing