AC 302 Week 2 Quiz 100% Correct

AC 302 Question 2.
Question :
Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, the entire expected loss should be

 1.
Question :
In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

Question 3.
Question :
Adler Construction Co. uses the percentage-of-completion method. In 2014, Adler began work on a contract for $6,600,000 and it was completed in 2015. Data on the costs are:
                                                                              Year Ended December 31
                                                                                   2014                  2015   
Costs incurred                                                      $2,340,000      $1,680,000
Estimated costs to complete                                  1,560,000                 —

For the years 2014 and 2015, Adler should recognize gross profit in 2014 and 2015 of
          2014                       2015     

Question 4.
Question :
Kiner, Inc. began work in 2014 on a contract for $16,800,000. Other data are as follows:
                                                                                  2014                      2015      
Costs incurred to date                                                $7,200,000          $11,200,000
Estimated costs to complete                                        4,800,000                     —
Billings to date                                                             5,600,000            16,800,000
Collections to date                                                        4,000,000            14,400,000
           
If Kiner uses the percentage-of-completion method, the gross profit to be recognized in 2014 is

Question 5.
Question :
When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct?