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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 percentage of completion method.Revenue recognized in year three will be:
A)$1,800,000
B)$2,795,030
C)$4,166,667
D)$12,500,000

Question

Quizplus · Accepted Answer

Revenue recognized in year three is $2,795,030. This is calculated by multiplying the total contract price of $12,500,000 by the percentage of completion at the end of year three, which is 22.36%.

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