Cost Estimates on a Long-Term Contract May Indicate That a Loss

question 140

Multiple Choice

Cost estimates on a long-term contract may indicate that a loss will result on completion of the entire contract. In this case, the entire expected loss should be

• A) recognized in the current period, regardless of whether the percentage-of-completion or completed-contract method is employed.
• B) recognized in the current period under the percentage-of-completion method, but the completed-contract method defers recognition of the loss to the time when the contract is completed.
• C) recognized in the current period under the completed-contract method, but the percentage-of-completion method defers the loss until the contract is completed.
• D) deferred and recognized when the contract is completed, regardless of whether the percentage-of-completion or completed-contract method is employed.

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Definitions:

Psychosocial Stages

Erikson's theory that proposes eight stages of human development, each characterized by a different conflict that must be resolved for healthy psychological development.

Preschool Years

The period in a child's life prior to attending kindergarten, typically from ages 3 to 5, marked by rapid growth and development in various areas.

Human Development

A multidisciplinary field studying changes in human beings over the course of their life, including physical, cognitive, and social growth.

Erikson's Emphasis

Focus on the developmental stages of the human lifespan, proposing that individuals go through eight stages of psychosocial development from infancy to late adulthood.