Reference no: EM132904054
Fletcher steel company is constructing a bridge at a fixed price of $15 million over three years. The customer remains in control of the bridge throughout the contract.
The expected costs and billings are provided below.
Year 1 2 3
Expected Cost 4,000,000 4,500,000 3,500,000
Billings 5,000,000 5,000,000 5,000,000
Problem 1: What is the revenue Fletcher steel company should recognize in year 2? (assume percentage of completion can be reliably estimated)
A. 5,625,000
B. 4,375,000
C. 1,000,000
D. 15,000,000