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Dudeck Construction Co.agreed to build a bridge for Genoa City.The contract specifies that construction will take three years and Dudeck will receive $12,500,000.The company expects annual costs to be $3,500,000; $2,750,000; and $1,800,000.
-Assume Dudeck uses the completed contract method.Expenses recognized in year two will be:
A)$ -0-
B)$2,750,000
C)$2,683,333
D)$8,050,000

Question

Quizplus · Accepted Answer

Under the completed contract method, expenses and revenues are recognized only when the contract is fully completed. Since the contract spans three years and the question pertains to year two, no expenses are recognized in year two.

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