Under ASPE, When Work to Be Done and Costs to Be

question 20

Multiple Choice

Under ASPE, when work to be done and costs to be incurred on a long-term contract can be estimated reliably, which of the following methods of revenue recognition is preferable?

• A) instalment method
• B) percentage-of-completion method
• C) completed-contract method
• D) zero-profit method

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Definitions:

Financial Statement

A formal record of the financial activities and position of a business, individual, or other entity, typically detailing income, assets, liabilities, and equity at a specific point in time.

Default

Failure to make payments on a loan.

Loan Payments

Periodic payments made towards the balance and interest of a loan, following a predefined schedule until the loan is fully repaid.

Chapter 7

A provision under U.S. bankruptcy law for liquidating a debtor's assets to pay off creditors.