Gleason Construction Enters into a Long-Term Fixed Price Contract to Build

Gleason Construction enters into a long-term fixed price contract to build an office building for $30,000,000. In the first year of the contract Gleason incurs $8,000,000 of cost and the engineers determined that the remaining costs to complete are $12,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the percentage-of-completion method? (Round the gross profit percentage to 4 decimal places)

A) $22,000,000 profit
B) $18,000,000 loss
C) $4,000,000 profit
D) $12,000,000 loss

Correct Answer:

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