Assuming BCC uses the percentage-of-completion method of recognition the gross profit recognized in 2013 would be (rounded to the nearest thousand):

Question

Quizplus · Accepted Answer

Using the percentage-of-completion method, gross profit is recognized proportionately to the completion of the project.

Total contract revenue = $400,000

Costs incurred in 2013 = $240,000

Estimated costs to complete project = $60,000

Total costs = $300,000

Percentage completed in 2013 = ($240,000 ÷ $300,000) = 0.8 or 80%

Therefore, gross profit recognized in 2013 = (0.8 x $50,000) = $40,000

Rounding to the nearest thousand gives us an answer of $42,000.

Assuming BCC Uses the Percentage-Of-Completion Method of Recognition the Gross