Robin Construction Company began a long-term contract in 2016.The contract price was $800,000.The estimated cost of the contract at the time it was begun was $500,000.The actual cost incurred in 2016 was $350,000.The contract was completed in 2017 and the cost incurred that year was $125,000.Under the percentage of completion method:
A)Robin should report $300,000 of income in 2016.
B)Robin should report $90,000 of income in 2017.
C)Robin will receive interest (under the lookback method)on the underpayment of taxes in 2016.
D)Robin should report $325,000 of income in 2016.
E)None of the above is correct.

Question

Quizplus · Accepted Answer

The Answer of Robin Construction Company began a long-term contract in 2016.The contract price was $800,000.The estimated cost of the contract at the time it was begun was $500,000.The actual cost incurred in 2016 was $350,000.The contract was completed in 2017 and the cost incurred that year was $125,000.Under the percentage of completion method:
A)Robin should report $300,000 of income in 2016.
B)Robin should report $90,000 of income in 2017.
C)Robin will receive interest (under the lookback method)on the underpayment of taxes in 2016.
D)Robin should report $325,000 of income in 2016.
E)None of the above is correct.

Robin Construction Company Began a Long-Term Contract in 2016