The Percentage-Of-Completion Method Is Used to Recognize Revenue and Gross

question 52

Essay

The percentage-of-completion method is used to recognize revenue and gross profit for construction and other types of projects that extend beyond one accounting period.A problem similar to long-term construction projects exists in accounting for service revenue that is earned for more than one performance act where such activity extends beyond one accounting period.
Provide examples of service activities that might extend beyond one accounting period and propose means of recognizing revenues for such activities.

---

Definitions:

Larger Quantities

Denotes the procurement, production, or offering of goods in amounts greater than usual.

Strategic Partners

Businesses or entities that collaborate through agreements or alliances to achieve common goals, share resources, or enhance competitive advantages.

Supply Chain Intermediaries

Entities that act as middlemen in the distribution process from manufacturer to consumer, such as wholesalers and retailers.

Administered Vertical Marketing System

A coordinated marketing system where a dominant channel member organizes promotional activities and other aspects of the marketing mix without owning the production or distribution elements.