Question

When accounting for revenue over time for a long-term contract, the percentage of completion used to recognize revenue in the first year usually is determined by measuring: Multiple Choice Costs incurred in the first year, divided by estimated remaining costs to complete the project. Costs incurred in the first year, divided by estimated total costs for the completed project. Costs incurred in the first year, divided by estimated gross profit. Costs incurred in the first year, divided by estimated total costs to be incurred in the remaining years of the project.

Answer 1

Answer:

When accounting for revenue over time for a long-term contract, the percentage of completion used to recognize revenue in the first year usually is determined by measuring Costs incurred in the first year, divided by estimated total costs for the completed project

Explanation:

The percentage of completion method of revenue recognition is a concept in accounting that refers to a method by which a business recognizes revenue on an ongoing basis depending on the stages of a project’s completion.

In other words, the percentage of completion method is used for longer-term projects and recognizes revenue and expenses as a percentage of the project’s completion during the period.