Assume That Playground Corp

Multiple Choice

Assume that Playground Corp. has agreed to construct a new playground for Township County for $2,300,000 dollars. Construction of the new playground will begin on March 17, 2007 and is expected to be completed in August 2008. At the signing of the contract Playground Corp. estimates that the it will cost $1,600,000 dollars to build the playground. At the end of 2007 Playground provided the following information about the project:
If Playground uses the percentage of completion to recognize revenue on the long-term contract how much gross margin should Playground recognize in 2007?

A) $389,200
B) $278,000
C) $556,000
D) $0