Boing Companies began operations on January 1, 2020. The company only has one client for whom it
Question:
Boing Companies began operations on January 1, 2020. The company only has one client for whom it is building an airplane at a price of $ 2,000,000. The costs incurred during 2020 and directly related to the construction of the aircraft were $ 375,000. The company estimates that the total costs required to complete construction is $ 1,125,000. The following is the partial financial statement of the Boing Company for 2020.
BOING COMPANIES
Statement of Financial Position
As of December 31, 2020
ASSETS:
Current assets:
Cash
$ 100,000
Accounts Receivable
150,000
Inventory:
Construction in Progreso
375,000
Construction in Progreso
(350,000)
25,000
Other current assets
225,000
Total Current Assets
$ 500,000
Based on the information provided, what method is Boing using to account for the construction contract?
Select one:
a. Percentage of Completion
b. Can't determine
c. Term Sales
d. Contract Completed
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry