Nova Construction Company (NCC)entered into a contract to build a school for $1,800,000.Construction commenced on May 1,2017,with a planned completion date of December 31,2019.A summary of the related accounting information is provided below:

How much gross profit would be recognized in fiscal 2017 if NCC uses the percentage of completion method?
A)$50,000
B)$100,000
C)$130,000
D)$180,000

Question

Nova Construction Company (NCC)entered into a contract to build a school for $1,800,000.Construction commenced on May 1,2017,with a planned completion date of December 31,2019.A summary of the related accounting information is provided below:

How much gross profit would be recognized in fiscal 2017 if NCC uses the percentage of completion method?
A)$50,000 
B)$100,000 
C)$130,000 
D)$180,000

Quizplus · Accepted Answer

A)$400,000 / ($400,000 + $1,200,000)× ($1,800,000 - $1,600,000)= $50,000

Nova Construction Company (NCC)entered into a Contract to Build a School