Smile Operators entered into a contract to build a swimming complex for $1,800,000.Construction commenced on July 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 2018 if the company uses the completed contract method under ASPE?
A)$0
B)$120,000
C)$220,000
D)$250,000

Question

Smile Operators entered into a contract to build a swimming complex for $1,800,000.Construction commenced on July 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 2018 if the company uses the completed contract method under ASPE?

How much gross profit would be recognized in 2018 if the company uses the completed contract method under ASPE?
A)$0 
B)$120,000 
C)$220,000 
D)$250,000

Quizplus · Accepted Answer

Under the completed contract method, no revenue or expenses are recognized until the project is completed. Therefore, no gross profit would be recognized in 2018, regardless of the percentage of completion.

Smile Operators Entered into a Contract to Build a Swimming