What would be the year two journal entry

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Question 1: Builder Co. is engaged in a 3-year contract to complete a manufacturing facility. Year 1 was profitable. In Year 2, Builder Co.'s estimate of future costs changes such that Builder Co. expects total costs incurred to be greater than the contract price. If Builder Co. recognizes revenue for its contract upon completion, what would be its Year 2 journal entry?

Option A. No entry required - Builder Co. doesn't recognize any profit or loss until Year 3.

Option B. Debit Loss on Construction Contract, Credit CIP

Option C. Debit Cost of Construction, Credit CIP, Credit Revenue

Option D. Debit Cost of Construction, Debit CIP, Credit Revenue

Reference no: EM132489799

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