When Both the Total Profit on the Contract and the Progressive

question 66

Multiple Choice

When both the total profit on the contract and the progressive degree of completion during construction can be reliably estimated,a construction firm should record income on a long-term construction project using the:

• A)percentage of completion method.
• B)sales method.
• C)instalment method.
• D)collection method.

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Definitions:

Excess Fair Value

The amount by which the fair value of an asset exceeds its carrying value on the balance sheet, often recognized in business combinations or asset revaluations.

Franchise Contract

A legal agreement granting an individual or group the rights to market a company’s products or services in a specific territory.

Consolidated Net Income

The total net income of a parent company and its subsidiaries, after inter-company transactions have been eliminated.

Noncontrolling Interests

A portion of equity in a subsidiary not held by the parent company, representing the minority ownership's share of the subsidiary's net assets and income.