Why Is the Gross Method Used by the Lessor in Most

question 100

Essay

Why is the gross method used by the lessor in most cases instead of the net method if both produce the same results?

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Definitions:

Equivalent Units Of Production

A method used in process costing to convert partially completed units into a number of equivalent full units.

Percentage Of Completion

An accounting method used to recognize revenue and expenses of long-term contracts as a function of the estimated completion percentage of the project.

Direct Materials

Direct materials are the raw materials that are directly incorporated into a finished product and are a significant portion of the total production cost.

Equivalent Unit

A measure used in cost accounting to represent a portion of a product's costs when it is partially completed.