In 2000, Able Builders, Inc. was awarded a contract to build a bridge for the City of Metropolis. A reliable estimate of the total cost of the contract was $ 60000000. The contract price was $ 80000000. All invoices were paid in cash in the year the invoice was submitted. A schedule of revenues received and costs incurred during the contract was as follows (in $ millions):
A．
B．2001
C．2002
D．2003
E．2004
F．Amount Invoiced
G．l0
H．30
I．30
J．10
K．Costs Incurred
L．12
M．22
N．21
O．5
参考答案：B
解析：Under the installment sales method, revenue is recognized when the cash is received. Because Able Builders receives $ 30 million in cash (invoices were paid in cash in year they were submitted) $ 30 million in revenue is recognized. Note that the installment sales method would also result in the highest gross profit in 2003. Since costs are 75 percent of sales (60/80), costs of $ 22.5 million would be recognized resulting in a gross profit of $ 7.5 million. Under the cost recovery method, revenues are recognized only to the extent of costs incurred until all costs are collected, so revenues recognized through the end of 1999 would be ($12+$22=) $ 34 million. In 2003, not all COGS have been collected, so revenue of $21 million would be recognized to equal the costs incurred for that year. Gross profit would be $ 0. Under the completed contract method, no revenue is recognized in 2003 because all $ 80 million of revenue is recognized in 2004.