The following data relate to a construction job started by Harrington Co.during 2014:

-See Harrington Co.information above.Under the percentage-of-completion method,how much should Harrington recognize as gross profit for 2014?
A) $0
B) $40,000
C) $80,000
D) $100,000

Question

The following data relate to a construction job started by Harrington Co.during 2014:
 
-See Harrington Co.information above.Under the percentage-of-completion method,how much should Harrington recognize as gross profit for 2014?
A) $0 
B) $40,000 
C) $80,000 
D) $100,000

Quizplus · Accepted Answer

The percentage-of-completion method recognizes revenue and gross profit based on the progress of the construction project. The amount of gross profit recognized is typically calculated based on the percentage of the project completed during the year, compared to the total expected costs and revenue. Without specific numbers from Harrington Co.'s information, the correct choice cannot be determined through calculation here. However, based on the options provided and assuming a scenario where the calculation leads to recognizing $40,000 as gross profit for 2014, option B would be correct. This method ensures that revenue and profit recognition aligns with the extent of work completed.

The Following Data Relate to a Construction Job Started by Harrington