Question

For profitable long-term contracts, income is recognized in each year when revenue is recognized: At a Point in Time Upon Over Time According to Contract Completion Percentage of Completion a. No No b. Yes No c. Yes Yes d. No Yes

Answer 1

Answer:

d. No Yes

Explanation:

    At a Point in Time Upon                 Over Time According to

    Contract Completion                      Percentage of Completion

a)          no                                                     no

b)          yes                                                   no

c)          yes                                                   yes

d)          no                                                    yes

When companies engage in long contract, they generally use the percentage of completion method to recognize both expenses and revenues. As the company finishes or completes a certain percentage of the project, it will start to recognize revenue according to how much work it completed.