If the Completed-Contract Method Is Used,what Is the Basis for Determining

question 49

Multiple Choice

If the completed-contract method is used,what is the basis for determining the income to be recognized in the second year of a three-year contract?

• A) Cumulative actual costs incurred only
• B) Incremental cost for the second year only
• C) Latest available estimated costs
• D) No income would be recognized in year 2

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Definitions:

Independently Negotiated

Terms or agreements that have been discussed and agreed upon between parties without external influence or coercion.

Training Rate

The pace or speed at which new employees are trained and prepared to perform effectively in their roles within an organization.

FLSA

The Fair Labor Standards Act, which sets standards for wages, overtime pay, and employment of minors in the United States.