Question
In: Accounting
Under the completed-contract method:
Under the completed-contract method:
Select one:
a. Revenue, cost, and gross profit are recognized during the production cycle.
b. Costs are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.
c. Revenue, cost, and gross profit are not recognized until the contract is completed.
d. Gross Profit is recognized during the production cycle, but net losses are delayed until the contract is completed.
Solutions
Expert Solution
Option "C" is the correct answer.
When the duration of the contract is more than the one year that is one accounting year, then only this method will be used. otherwise this method will not be used.
In this completed contract method,
After the completion of full contract only, accounting of contract-related costs, the accounting of contract-related revenues and their gross profits are recognized.
Revenue, cost, and gross profit are not recognized until the contract is completed is the correct option.
ekkarill92 answered 2 years agoRelated Solutions
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Sheridan commenced doing business on January 1,
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Estimates of costs to complete and extent of progress toward
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$40,000,000
a) A telecommunications company enters into a contract with a customer. Under the contract, the company...
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Cost
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2017
15,000,000
2018
6,000,000
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2016
2017
2018
Revenue
Answer
Answer
Answer
Expense
Answer
Answer
Answer
Gross Profit
Answer
Answer
Answer...
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