1. If the outcome of a long-term contract can be measured reliably, the preferred accounting method under U.S. GAAP is:

1. The cost recovery method.
2. The completed contract method.

c. The percentage of completion method

2 Jasper Builders, Inc. incurs the following costs on a contract to construct a building for $2,000,000:

2006: $500,000

2007: 700,000

2008: 300,000

Total $1,500,000

Under the percentage of completion method, the projects net income in 2008 is closest to:

1. $600,000
2. $100,000
3. $300,000