In 2010,Cashmere Construction Company enters into a contract to build a beach cottage for Martha and Rob for a total price of $500,000.Cashmere estimates the total cost to complete the cottage to be $400,000.In 2010,Cashmere incurred $300,000 of costs on the contract,and in 2011 the contract was completed at a total cost of $425,000.Cashmere is not required to recognize any income from the contract until 2011.

Question

Quizplus · Accepted Answer

Cashmere can only recognize income on the contract in the year in which it is completed, which is 2011 in this case. Therefore, no income can be recognized in 2010.

In 2010,Cashmere Construction Company Enters into a Contract to Build