Smile Operators entered into a contract to build a swimming complex for $1,800,000. Construction commenced on July 1, 2011, with a planned completion date of December 31, 2013. A summary of the related accounting information is provided below: How much gross profit would be recognized in 2012 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, 2011, with a planned completion date of December 31, 2013. A summary of the related accounting information is provided below:  How much gross profit would be recognized in 2012 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 expense is recognized until the contract is complete. Therefore, no gross profit would be recognized in 2012.

Smile Operators Entered into a Contract to Build a Swimming