Cost Estimates at the End of the Second Year Indicate

question 427

Multiple Choice

Cost estimates at the end of the second year indicate a loss will result on completion of the entire contract.Which of the following statements is correct?

• A)Under the completed-contract method, the loss is not recognized until the year the
• Construction is completed.
• B)Under the percentage-of-completion method, the gross profit recognized in the first year
• Must not be changed.
• C)Under the completed-contract method, when the billings exceed the accumulated costs,
• The amount of the estimated loss is reported as a current liability.
• D)Under the completed-contract method, when the Construction in Process balance
• Exceeds the billings, the estimated loss is added to the accumulated costs.

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