In: Accounting
1. Future costs associated with a restructuring can only be recognized if they:
Select one:
a. will lead to a legal obligation in the future.
b. will lead to a constructive obligation in the future.
2. A construction company has contracted with a major university to build a new sports complex. The contract calls for two sports arenas to be built in the next three years. The company will receive $24,000,000 for the project and their engineers originally estimated a total cost to construct the two arenas of $20,400,000. The two arenas are scheduled for completion in May of 2007. If an actual cost of $9,200,000 is expended in 2004, and the engineers estimate another $12,800,000 is to be expended to complete construction, how much income is to be recognized under the percentage-of-completion method in 2004?
Select one:
a. $1,163,636
b. $836,364
c. $3,600,000
d. $2,000,000
c. will lead to a constructive and legal obligation in the future.
d. will lead to a provision for restructuring cost