In 2001, Wilson, Inc. entered into a long-term construction contract with the Gordon School District to construct an elementary school for $20 million. The cost to complete the contract has been reliably estimated at $15 million. During 2001, costs of $7.5 million were incurred under the contract. A total of $9 million in advance billings were made and $5 million of those billings were received in cash. If Wilson used the percentage-of-completion method to account for this contract, Wilson, Inc.’s balance sheet as of December 31, 2001, will show a balance of: A) $4 million in the Net Construction-in-Progress asset account. B) $4 million in the Net Advance Billings liability account. C) $1 million in the Net Construction-in-Progress asset account. D) $1 million in the Net Advance Billings liability account. I am confused between C or D answer. Can someone explain for me this case please? Thanks.
if Net CIP is negative , only Net AB (= AB-CIP) is reported in statements so it’s D ,maybe because negative asset doesn’t mean anything 
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I’ll say answer is C. 7.5/15 * 20 = 10M Advance Billing received of 9M…, short 1M. 9M - 10M = -1M —> Receivable ($1 million in the Net Construction-in-Progress asset account.)
Damil4real Wrote: ------------------------------------------------------- > I’ll say answer is C. > > 7.5/15 * 20 = 10M > > Advance Billing received of 9M…, short 1M. > > 9M - 10M = -1M —> Receivable ($1 million in the > Net Construction-in-Progress asset account.) C for me also
I agree with C and quite clear now, thanks for all^.^