Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, under the % of completion method, in the first year of the project, the entire expected loss should be

recognized immediately on the Income Statement in the current period.

recognized immediately on the Income Statement in the current period under the completed-contract method only.

spread over all the years of the project

recognized in final year of the project.

In 2020, Pop Construction Corp. began work on a contract for $ 3,700,000. Other details follow:

	2020
Costs incurred during the year....................................................................	$ 1,800,000
Estimated costs to complete as of December 31...................................	1,200,000
Billings during the year.................................................................................	1,650,000
Collections during the year.........................................................................	975,000

Pop uses the percentage-of-completion method. For calendar 2020, Pop should report gross profit of

$ 700,000.

$ 2,220,000.

$ 420,000.

$ 150,000.

At the end of year 2, the accounting records for a multi-year construction project indicate actual costs incurred to date of $ 3,200,000, and the most recent estimate of additional future costs of $ 7,000,000. Assuming the percentage-of completion method is used, to one decimal, at the end of year 2 the project is

25.2% complete.

31.37% complete.

33.7% complete.

31.2% complete.

Mobey Construction Corp. uses the percentage-of-completion method. In 2020, Mobey began work on a contract for $2,475,000 which was completed in 2021. Data on the costs are:

		Year Ended December 31
		2020		2021
Costs incurred		$877,500		$630,000
Estimated costs to complete		585,000

For the calendar years 2020 and 2021, Mobey should recognize gross profit of

$0 in 2020 and $967,500 in 2021

$607,500 in 2020 and $360,000 in 2021

$580,500 in 2020 and $387,000 in 2021

$607,500 in 2020 and $967,500 in 2021

Punk Construction Corp. has consistently used the percentage-of-completion method. In 2017, Punk started work on a $7,000,000 construction contract that was completed in 2018. The following information was taken from Cymbal's 2017 accounting records:

Billings to date......................................... $2,200,000 Costs incurred......................................... 2,100,000 Collections to date................................. 1,400,000 Estimated costs to complete................ 4,200,000

Under the earnings approach, what amount of gross profit should Cymbal recognize in 2017 on this contract?

$233,333

$700,000

$350,000

$466,667

Manson Construction Corp. has consistently used the percentage-of-completion method. In 2020, Manson started work on a $ 10,500,000 construction contract that was completed in 2021. The following information was taken from Manson's 2020 accounting records:

Billings to date.................................................... $ 3,300,000 Costs incurred..................................................... 3,150,000 Collections to date............................................. 2,100,000 Estimated costs to complete............................ 6,300,000

Under the earnings approach, what amount of gross profit should Manson recognize in 2020 on this contract?

$ 350,000

$ 700,000

$ 525,000

$ 1,050,000

Haven Corp. contracted to construct a building for $ 750,000. Construction began in 2020 and was completed in 2021. Data relating to the contract follow:

Year ended December 31, 2020 2021 Costs incurred...................................................................... $ 300,000 $ 230,000 Estimated costs to complete............................................. 200,000

Haven uses the percentage-of-completion method. For the calendar years 2020 and 2021, respectively, Haven should report revenue of

$ 0 and $ 220,000.

$ 135,000 and $ 85,000.

$ 450,000 and $ 300,000.

$ 150,000 and $ 70,000.

In 2020, Pop Construction Corp. began work on a contract for $3,700,000. Other details follow:

2020

Costs incurred during the year $1,800,000

Estimated costs to complete as of December 31 1,200,000

Billings during the year 1,650,000

Collections during the year 975,000

Pop uses the percentage-of-completion method. For calendar 2020, Pop should report Revenue in 2020 of:

$150,000

$700,000

$2,220,000

$420,000

Bluegrass Builders Ltd. Is using the percentage-of-completion method for a $ 2,010,000 contract that will take two years to complete. Data at December 31, 2020, the end of the first year, are

Costs incurred to date............................................................ $ 925,000 Estimated total costs ............................. 2,025,000 Billings to date......................................................................... 850,000 Collections to date.................................................................. 700,000

The gross profit or loss that should be recognized for 2020 is

$ 15,000 gross profit.

$ 15,000 loss.

$ 918,680 revenue.

$ 0.

Manson Construction Corp. has consistently used the percentage-of-completion method. In 2020, Manson started work on a $10,500,000 construction contract that was completed in 2021.

The following information was taken from Manson's 2020 accounting records:

Billings to date $3,300,000

Costs incurred 3,150,000

Collections to date 2,100,000

Estimated costs to complete 6,300,000

What is the amount of revenue that will be recorded in 2020?

$350,000

$3,500,000

$525,000

$1,050,000