A Bay Harbor Islands contract is $2,860,000. Cost incurred is $1,001,000 and estimated cost to complete is $859,000. Under percent-complete reporting, what revenue is earned to date?
Correct Answer
A) $1,539,172
Earned revenue equals contract price multiplied by cost-based percent complete.
Why This Is the Correct Answer
Earned revenue equals contract price multiplied by cost-based percent complete.
Why the Other Options Are Wrong
Option B: $1,001,000
$1,001,000 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Option C: $1,320,828
$1,320,828 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Option D: $538,172
$538,172 is below the supported result for percent-complete earned revenue; it likely uses the wrong base, period, or account bucket.
Memory Technique
Percent-Complete drawer for Cpa Reviews: label earned before counting dollars.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section One, Accounting Methods, Percentage-of-Completion Method; use the job ledger figures in the stem and recompute the same accounting measure.
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