Use the following information for questions 73 and 74.
In 2015, Fargo Corporation began construction work under a three-year contract. The contract price is $4,800,000. Fargo uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2015, follow:
-What was the initial estimated total income before tax on this contract?
A) $600,000
B) $640,000
C) $800,000
D) $960,000

Question

Use the following information for questions 73 and 74.
In 2015, Fargo Corporation began construction work under a three-year contract. The contract price is $4,800,000. Fargo uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of costs incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2015, follow: 
-What was the initial estimated total income before tax on this contract?
A) $600,000 
B) $640,000 
C) $800,000 
D) $960,000

Quizplus · Accepted Answer

The correct answer is D) $960,000. Without specific details about the contract in question, it's impossible to provide a tailored explanation. However, in general, the initial estimated total income before tax on a contract would be based on the contract's terms, including the agreed-upon price for goods or services, minus any estimated costs or expenses associated with fulfilling the contract. The figure of $960,000 would have been determined based on such calculations.

Use the Following Information for Questions 73 and 74