The profit for a particular project of Blue Fin Ltd,using the percentage of completion method,was $470 000 for year 1 and $690 000 for year 2 (completion).
-What difference would there be to the total profit for two years if the completion of production method were used?
A) Profit would be $1 160 000 higher.
B) Profit would be $690 000 higher.
C) Profit would be $470 000 higher.
D) There would be no difference.

Question

Quizplus · Accepted Answer

Under the percentage of completion method, profit is recognized proportionally as the project progresses, leading to a total profit of $470,000 + $690,000 = $1,160,000 over two years. Using the completed contract method, the entire profit is recognized upon completion, which would also total $1,160,000. Thus, there is no difference in the total profit recognized between the two methods.

The Profit for a Particular Project of Blue Fin Ltd,using