Question 1 in year 1 diamond construction company contracts, Ask an Expert

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Question: 1. In year 1, Diamond Construction Company contracts to build an apartment building. The contract will take two years to complete. The contract price is $1,000,000 and Diamond estimates total costs of $800,000. Actual costs are: $600,000 in year 1 and $250,000 in year 2. If Diamond uses the percentage of completion method to account for this long-term contract, what are Diamond's gross income and deductions for year 1?

Gross income: $0 Deductions: $0

Gross income: $1,000,000 Deductions: $800,000

Gross income: $750,000 Deductions: $600,000

Gross income: $750,000 Deductions: $637,500

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M92709026

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