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How much revenue and gross profit is recognized

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Question 1: A company received a contract to build an office building for $5 million. The project is estimated to take three years to complete. A reliable estimate of total cost of this contract is $3.75 million and the total cost incurred during the first year was $1.5 million. How much revenue and gross profit is recognized in the first year under the percentage-of-completion method?

A. Revenue - $2,000,000; Gross profit - $500,000

B. Revenue - $2,000,000; Gross profit - $200,000

C. Revenue - $2,500,000; Gross profit - $1,500,000

D. Revenue - $2,500,000; Gross profit - $200,000

Reference no: EM132492509

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