Fields Construction Decides to Change from Completed-Contract Method to Percentage-Of-Completion

question 105

Essay

Fields Construction decides to change from completed-contract method to percentage-of-completion method of recording construction projects.It also has a compensation plan for bonuses to supervisors for three percent of net income,which are retroactive for changes in prior years net income.Discuss the direct and indirect effects of this change.

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Definitions:

Central Planning

An economic system where the government makes all decisions about the production and distribution of goods and services, often found in socialist economies.

Chain Reaction

A sequence of reactions where a reactive product or by-product causes additional reactions to take place, often leading to a self-sustaining series.

Innovation Lagged

The delay or slow pace in the development and adoption of new technologies, products, or processes.

Centrally Planned Economies

Economies in which the government makes all decisions about the production and distribution of goods and services.