Robin Construction Company Began a Long-Term Contract in 2018

Robin Construction Company began a long-term contract in 2018. The contract price was $800,000. The estimated cost of the contract at the time it was begun was $500,000. The actual cost incurred in 2018 was $350,000. The contract was completed in 2019 and the cost incurred that year was $125,000. Under the percentage of completion method:

A) Robin should report $300,000 of income in 2018.
B) Robin should report $90,000 of income in 2019.
C) Robin will receive interest (under the lookback method) on the underpayment of taxes in 2018.
D) Robin should report $325,000 of income in 2018.
E) None of the above is correct.

Correct Answer:

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