Long-term construction contracts

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A construction company uses the percentage-of-completion method for long-term construction contracts. A particular job was begun in 2010 and completed in 2012. During 2011, it appeared that the project would cost 25 percent more than originally expected. Data at the end of each year are given below:

2010 2011 2012
End-of-year estimated cost remaining $ 200,000 $ 100,000 $ -
Annual cost incurred 200,000 200,000 60,000

The contract price was $700,000. Assuming the company properly recorded income in 2010, how much income should be recorded in 2011?

a. $10,000

b. $42,000

c. $160,000

d. $192,000

Reference no: EM13148177

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