Using the percentage-of-completion method, Indiana:

Question

Quizplus · Accepted Answer

The percentage-of-completion method recognizes revenue and gross profit as progress is made towards completing a project. In this case, the company has completed 30% of the project ($90 million costs incurred / $300 million total costs). Therefore, they would recognize 30% of the total revenue ($120 million) as revenue in 2013, which is $36 million. Since the costs incurred are equal to the revenue recognized, the company would recognize a gross profit of $0. However, since the revenue recognized ($36 million) is greater than the costs incurred in 2013 ($27 million), the company would recognize a gross profit of $9 million. Thus, the correct answer is (C) Recognized $9 gross profit on the project in 2013.

Using the Percentage-Of-Completion Method, Indiana