In 2005, Wilson, Inc. entered into a long-term construction contract with the Gordon School District to construct an elementary school for $ 20 million. The cost to complete the contract has been reliably estimated at $15 million. During 2005, costs of $ 7.5 million were incurred under the contract. A total of $ 9 million in advance billings were made and $ 5 million of those billings were received in cash. If Wilson used the percentage-of-completion method to account for this contract, Wilson, Inc.’s balance sheet as of December 31, 2005, will show a balance of:（）
A. $ 4 million in the Net Construction-in-Progress asset account.
B. $ 4 million in the Net Advance Billings liability account.
C. $ 1 million in the Net Construction-in-Progress asset account.
参考答案：C
解析：
Under the percentage-of-completion method, revenues are recognized as costs are incurred. As of December 31, 2005, ($7.5/$15=) 50 percent of costs have been incurred. Revenues of ($20 million×0.5=) $10 million should be recognized in 2005. Billings of $9 million have been made, so the difference between revenue recognized and billings made of ($10-$9=)$1 million is reported in an asset account as net construction-in-progress.