Multi-Storey Builders Ltd had a large three-year project with total revenue of $8 000 000 and estimated total costs of $6 500 000.The project was 20 per cent complete at the end of the first year,70 per cent complete at the end of the second year and 100 per cent complete at the end of the third year.Revenues and costs were as estimated.
- How much profit was earned during the second year if the completed contract method was used?
A) $300 000
B) $750 000
C) $1 050 000
D) $0

Question

Quizplus · Accepted Answer

Under the completed contract method, profit is recognized only when the contract is fully completed. Since the project was completed at the end of the third year, no profit would be recognized in the second year.

Multi-Storey Builders Ltd Had a Large Three-Year Project with Total