On January 1, 2006, Builder Associates entered into a $1,000,000 long-term, fixed-price contract to construct a factory building for Manufacturing Company. Builder accounts for this contract under the percentage-of-completion, and estimated costs at completion at the end of each quarter for 2006 were as follows:
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|
Quarter |
Estimated percentage-of-completion |
Estimated costs at completion |
|
1 |
10% |
$750,000 |
|
2[*] |
10% |
$750,000 |
|
3 |
25% |
$960,000 |
|
4[*] |
25% |
$960,000 |
What amounts should be reported by Builder as “Income on Construction Contract” in its quarterly income statements based on the above information?
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|
Gain (loss) for the three months ended |
||||
|
3/31/06 |
6/30/06 |
9/30/06 |
12/31/06 |
|
|
a. |
$0 |
$0 |
$0 |
$10,000 |
|
b. |
$25,000 |
$0 |
$(15,000) |
$0 |
|
c. |
$25,000 |
$0 |
$0 |
$0 |
|
d. |
$25,000 |
$0 |
$ 6,000 |
$0 |