In spring 2014, Parmac Engineering Company signed a $160 million contract with the city of Parkersburg, to construct a new city hall. Parmac expects to construct the building within two years and incur expenses of $120 million. The city of Parkersburg paid $40 million when the contract was signed, $80 million within the next six months, and the final $40 million exactly one year from the signing of the contract. Parmac incurred $48 million in costs during 2014 and rest in 2015 to complete the contract on time. (Numerical calculations required)
Using the percentage-of-completion method how much revenue should Parmac recognize in 2014? Select one:
a. $40 million
b. $120 million
c. $64 million
d. $80 million
e. None of the above
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