The Marathon Company Uses the Percentage-Of-Completion Method to Recognize Profits

Multiple Choice

The Marathon Company uses the percentage-of-completion method to recognize profits on long-term contracts. At the end of the second year of the contract, a project was 70% complete and an overall loss of $100,000 was expected. A $25,000 profit had been recognized in the first year of the contract. The loss to be recognized in the second year is

A) $ 75,000
B) $ 85,000
C) $105,000
D) $125,000