Reference no: EM132488991

Point 1: In 20X7, Buildall Inc. entered into a $6,000,000 contract to construct a building for a local bank. The contract is expected to take three years to complete. Buildall uses the cost-to-cost approach to estimate the stage of project completion. The following data pertain to the construction period: 20X7 20X8 20X9 Actual costs incurred $1,540,000 $1,300,000 $1,600,000 Estimated costs to complete 2,860,000 1,960,000 0 Billings during the year 1,800,000 2,000,000 2,200,000 Collections during the year 1,400,000 1,960,000 2,640,000

Question 1: What amount of gross profit should Buildall recognize in 20X8 on this contract? Round the percentage of completion to one significant decimal point (for example, 22.4%).

Option a) $152,000

Option b) $470,000

Option c) $712,000

Option d) $1,030,000