In Early 2014, the Key West Company Signed a Contract

Multiple Choice

In early 2014, the Key West Company signed a contract for construction of an industrial park to be completed in three years. At that time, estimated total costs were $2,250,000, and estimated total revenues were $4,000,000. During 2014, Key West incurred costs of $960,000 and collected $1,100,000. In December 2014, Key West recalculated total costs for the project to be $3,200,000 while estimated total revenues remained unchanged. What amount of profit (loss) should be recognized by Key West for 2014, using the percentage-of-completion method?

A) $266,667 profit
B) $ 55,000 loss
C) $240,000 profit
D) $285,000 loss