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

question 34

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 should defer 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 should defer the loss until the contract is completed.
• D)deferred and recognized when the contract is completed, regardless of whether the

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Definitions:

Allyl Radical

A molecular entity consisting of an alkene with a CH2-CH=CH2 structure where a hydrogen atom is removed, leaving an unpaired electron.

Major Organic Product

The primary product of a chemical reaction that has the highest yield, relative to other potential products.

Cycloheptene

A cyclic hydrocarbon with the molecular formula C7H12, featuring a seven-membered ring with one double bond.

N-Bromosuccinimide

A chemical reagent represented by the formula C4H4BrNO2, often used as a brominating and oxidation agent in organic synthesis.