Rice Corp. recognizes revenue over time to account for long-term contracts and has the following information for the first year of the contract: Contract price $500,000
Total expected costs on contract 400,000
Costs incurred in current year 60,000
Costs incurred in previous years 0
What is the amount of revenue recognized in year 1?
A.) $100,000
B.) $500,000
C.) $60,000
D.) $75,000

D.) $75,000

Explanation:

Amount of revenue recognized = Cost incurred to date / Estimated total cost * Contract price

Cost incurred to date=60,000

Estimated total cost=400,000

Contract price=500,000

Amount of revenue recognized= 60,000/400,000 * 500,000

=0-15 * 500,000

=$75,000

Amount of revenue recognized in year 1 is $75,000

the definition of a small business is an independently owned and operated company that is limited in size and in revenue depending on the industry. a local bakery that employs 10 people is an example of a small business. a manufacturing facility that employees less than 500 people is an example of a small business.