On October 1, Year 1, Little Co. enters into a contract with a customer to build a factory on the customer's land for $1,000,000. The construction of the factory is expected to be completed at the end of Year 5. Based on Little's accounting policies, the progress toward completion of the factory is measured using the input method based on costs incurred. During Year 1, Little incurred $450,000 in costs in respect to this contract and billed the customer for $600,000. At the end of Year 1, Little cannot reasonably estimate the total expected costs of the construction and cannot reasonably estimate the progress toward completion of the factory. However, Little expects to recover the costs incurred in the construction. What amount of revenue from this contract will be recognized in Little's Year 1 income statement?

Answer rating: 100% (QA)

Since Little Company cannot reasonably estimate the total expected costs of co... View the full answer