Percentage-of-completion technique

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Indiana Co. began a construction project in 2006 that will provide it $150 million when it is completed in 2008. During 2006, Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project. Suppose that, in 2007, Indiana incurred costs of $63.75 million and estimated an additional $42.75 million in costs to complete the project. Using the percentage-of-completion method, Indiana:

a) Recognized $3.75 million loss on the project in 2007.

b) Recognized $5.25 million gross profit on the project in 2007.

c) Recognized $7.5 million gross profit on the project in 2007.

d) None of the above is correct.

Reference no: EM13135485

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