Use the following information for questions 76 and 77.
Gomez, Inc. began work in 2014 on contract #3814, which provided for a contract price of $14,400,000. Other details follow:
-Assume that Gomez uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2015 is
A) $1,800,000.
B) $2,700,000.
C) $4,650,000.
D) $14,400,000.

Question

Use the following information for questions 76 and 77.
Gomez, Inc. began work in 2014 on contract #3814, which provided for a contract price of $14,400,000. Other details follow: 
-Assume that Gomez uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2015 is
A) $1,800,000. 
B) $2,700,000. 
C) $4,650,000. 
D) $14,400,000.

Quizplus · Accepted Answer

Under the completed-contract method of accounting, all of the project's gross profit is recognized only when the project is entirely completed. Since the question does not provide specific details about the project's completion status or the years involved, it's not possible to determine the exact amount of gross profit to be recognized in 2015 without additional context. However, the question seems to imply that recognizing a portion of the total gross profit in 2015 is being considered, which contradicts the fundamental principle of the completed-contract method where no profit is recognized until the contract is complete. Therefore, without specific details, the correct choice cannot be determined from the provided options. This response is based on the standard understanding of the completed-contract method in accounting.

Use the Following Information for Questions 76 and 77