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1) At the end of the first year of a $9,000,000 contract, Mars Corporation provides the following information: Costs to date: $3,000,000 Estimated costs to

1) At the end of the first year of a $9,000,000 contract, Mars Corporation provides the following information:

Costs to date: $3,000,000
Estimated costs to complete 7,000,000
Progress billings during the year 1,800,000
Cash collected during the year 1,500,000

In the first year, Mars should recognize gross profit (loss) of

a ($300,000) under the percentage-of-completion method and $0 under the completed-contract method.

b

($1,000,000) under either the percentage-of-completion method or the completed-contract method.

c ($300,000) under either the percentage-of-completion method or the completed-contract method.

d

$0 under either the percentage-of-completion method or the completed-contract method.

2) The franchisor satisfies its performance obligation for a franchise license when control of the franchise rights is transferred.

a True

b False

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