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