Under the percentage-of-completion method, a company has recognized $40,000 of profit through to the beginning of the current year on a contract, and total estimated contract cost is $500,000 at that time. The contract price is $800,000. What is the percent of completion at the beginning of the current year?
A) 13.33%
B) 15.8%
C) 8%
D) Insufficient data

Question

Quizplus · Accepted Answer

The percent of completion is calculated as the profit recognized divided by the total contract profit. Total contract profit is $800,000 - $500,000 = $300,000. Thus, $40,000 / $300,000 = 13.33%.

Under the Percentage-Of-Completion Method, a Company Has Recognized $40,000 of Profit