Refer to Tullis Corporation.How should Tullis report Construction in Progress and Billings on Construction in Progress at the end of year 1 on the balance sheet assuming the use of the completed-contract method?
A)liability of $1,000,000
B)asset of $1,000,000
C)asset of $500,000
D)liability of $500,000

Question

Quizplus · Accepted Answer

Under the completed-contract method, if Billings on Construction in Progress exceed Construction in Progress, the difference is reported as a liability. Here, Billings exceed Construction in Progress by $1,000,000, so it is reported as a liability.