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Find how much is the revenue recognized

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Question 1: On Oct. 1, 20x1, ABC Co. enters into a construction contract with a customer. The performance obligation in the contract will be satisfied over time. ABC Co. uses the "cost-to-cost" method in measuring its progress. The estimated total contract cost is ?10M. In 20x1, ABC Co. incurred a total cost of ?6M, which includes ?2M advance payment to a subcontractor (the subcontracted work is not yet started) and ?200,000 cost of materials not yet installed. ABC Co. does not regard the cost of the unused materials as significant in relation to the expected total contract costs. Moreover, ABC Co. retains control over the unused materials because it can use them in a contract with another customer. The contract price is ?20M. How much is the revenue recognized in 20x1?

a. 7,600,000

b. 8,200,000

c. 11,600,000

d. 12,000,000

Reference no: EM132600997

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