On 5/1/14 Lavender Construction Co. entered into a fixed-price contract to const

Question

On 5/1/14 Lavender Construction Co. entered into a fixed-price contract to construct an apartment building for $3,000,000. Lavender appropriately accounts for this contract under the percentage-of-complete method. Information relating to the contract is as follows: At 12/31/14 = 20% Complete / $2,250,000 estimated cost at completion / $150,000 Income recognized (cumulative). At 12/31/15 = 60% complete / $2,400,000 estimated costs at completion / $360,000 Income recognized (cumulative) / What is the amount of contract costs incurred during the year ended 12/31/15? (a) $600,000 (b) $960,000 (c) $990,000 (d) $1,440,000

Explanation / Answer

(b) $960,000

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