Question

In: Accounting

Which of the following methods of recognizing income is most recommended? a. Billings method b. Percentage-of-Completion...

Which of the following methods of recognizing income is most recommended? a. Billings method b. Percentage-of-Completion method

Solutions

Expert Solution

Solution:

Under billing method, revenue is recognized when billing is made to the customer whether or not services is provided to customer. This method of revenue recognition is known as billing method.

Under percentage of completion method, revenue is recognized by multiplying percentage of work completed with contract price. If any revenue is already recognized in previous period, then revenue of previous period is subtracted from total revenue to be recognized till date in order to determine revenue to be recognized for current period.

There are various method used to determine percentage of completion. for example, to determine percentage of completion, cost incurred till date is divided by total estimated cost to complete the contract then this percentage id muliplied by contract price to determine revenue recognition. Sometimes engineer technical certification is used to determine percentage of completion.

The most recommended method for revenue recognition is percentage of completion method as most of the firm uses this method for revenue recognition as this method is providing most accurate results and revenue is recognized progressively over the period of contract.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

Boxer Corporation has consistently used the percentage-of-completion method of recognizing income. In 2018, Boxer started work...
Boxer Corporation has consistently used the percentage-of-completion method of recognizing income. In 2018, Boxer started work on a $45,000,000 construction contract that was completed in 2019. The following information was taken from Boxer's accounting records in 2018. Progress billings $15,400,000 Costs incurred 14,700,000 Collections 9,600,000 Estimated costs to complete 21,400,000 What amount of gross profit should Boxer have recognized in 2018 on this project?
In the construction industry, the percentage of completion (POC) method is the most common accounting method....
In the construction industry, the percentage of completion (POC) method is the most common accounting method. Explain what business environments create favorable conditions for a company to use this POC method.
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage 57 57 57 57 60 Interception Percentage 4.9 4.3 2.9 2.7 1.4 Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=47.4019 and b1=−0.7667 for the calculations. Round your answer to three decimal places. Step 2 of 5: Calculate the estimated variance of errors, s2e . Round your answer to three decimal places. Step 3 of 5: Calculate the...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage 60 61 62 62 65 Interception Percentage 4.4 2.6 2.5 2.1 1.3 Step 4 of 5: Construct the 98% confidence interval for the slope. Round your answers to three decimal places. Step 5 of 5: Construct the 95% confidence interval for the slope. Round your answers to three decimal places. Please help
The following table compares the completion percentage and interception percentage of 55 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 55 NFL quarterbacks. Completion Percentage 5858 5959 6161 6464 6565 Interception Percentage 4.54.5 44 3.53.5 3.53.5 3 Step 1 of 5 : Calculate the sum of squared errors (SSE). Use the values b0=14.2608 b 1 = − 0.1720 for the calculations. Round your answer to three decimal places
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage 58 59 62 64 66 Interception Percentage 4.6 4 3.6 1.8 1.4 Table Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=28.0781 and b1=−0.4045 for the calculations. Round your answer to three decimal places. Step 2: Calculate the estimated variance of errors s^2e Step 3: Calculate the estimated variance of slope s^2b1
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage 55 59 60 60 62 Interception Percentage 4.5 4.2 3.5 2.9 1.4 Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=26.9386 and b1=−0.3993 for the calculations. Round your answer to three decimal places. Step 2 of 5: Calculate the estimated variance of errors, se2. Round your answer to three decimal places. Step 3 of 5: Calculate the estimated...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage 59 59 59 60 61 Interception Percentage 4.5 3.9 3.4 2.1 2 Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=67.2500 and b1=−1.0750 for the calculations. Round your answer to three decimal places. Step 2 of 5: Calculate the estimated variance of errors, s2e. Round your answer to three decimal places Step 3 of 5: Calculate the estimated...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage  ...
The following table compares the completion percentage and interception percentage of 5 NFL quarterbacks. Completion Percentage   Interception Percentage 55   4.3 59   2.2 61   1.9 62   1.8 66   1.7 Step 1 of 5: Calculate the sum of squared errors (SSE). Use the values b0=16.4513and b1=−0.2322 for the calculations. Round your answer to three decimal places. Step 2 of 5: Calculate the estimated variance of errors, se2. Round your answer to three decimal places. Step 3 of 5: Calculate the estimated variance...
The following table compares the completion percentage and interception percentage of 55 NFL quarterbacks. Completion Percentage...
The following table compares the completion percentage and interception percentage of 55 NFL quarterbacks. Completion Percentage 60 61 62 64 65 Interception Percentage 4.8 2.5 2.3 1.8 1.1 Step 4 of 5 :   Construct the 98% confidence interval for the slope. Round your answers to three decimal places. Step 5 of 5 :   Construct the 95% confidence interval for the slope. Round your answers to three decimal places.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT