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How much is the profit recognized for silverchair co

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Reference no: EM132779898

In 20x1, Silverchair Co., a construction company, enters into a contract with a customer for the construction of a building. The contract states a fixed fee of ?8,700,000. Silverchair's performance obligation in the contract is satisfied over time. Silverchair uses the 'cost-to-cost' method in measuring its progress in the contract.

Information on the contract follows:

Estimated total costs at completion 20x1 - 6,525,000 20x2 - 6,960,000
Percentage of completion - 20x1 - 15% 20x2 - 65%

Problem 1: How much is the profit recognized in 20x2?

a. 1,131,000
b. 978,750
c. 804,750
d. 840,750

Reference no: EM132779898

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