Which of the following would be used in the calculation of the gross profit recognized in the third and final year of a construction contract that is accounted for using the percentage-of-completion method? Actual Income
Contract Total Previously
Price Costs Recognized
A) Yes Yes No
B) Yes Yes Yes
C) Yes No Yes
D) No Yes Yes

Question

Quizplus · Accepted Answer

In the percentage-of-completion method, the contract total price, actual costs incurred, and previously recognized income are all used to calculate the gross profit recognized in any given year, including the final year of a construction contract. This method matches income with the degree of completion, hence the need for all these elements in the calculation.

Which of the Following Would Be Used in the Calculation