1. Future costs associated with a restructuring can only be recognized if they:

Select one:

a. will lead to a legal obligation in the future.

b. will lead to a constructive obligation in the future.

2. A construction company has contracted with a major university to build a new sports complex. The contract calls for two sports arenas to be built in the next three years. The company will receive $24,000,000 for the project and their engineers originally estimated a total cost to construct the two arenas of $20,400,000. The two arenas are scheduled for completion in May of 2007. If an actual cost of $9,200,000 is expended in 2004, and the engineers estimate another $12,800,000 is to be expended to complete construction, how much income is to be recognized under the percentage-of-completion method in 2004?

Select one:

a. $1,163,636

b. $836,364

c. $3,600,000

d. $2,000,000

c. will lead to a constructive and legal obligation in the future.

d. will lead to a provision for restructuring cost