Under the Percentage-Of-Completion Method, How Should Earned but Unbilled Revenues $\bold{\text{contract asset/liability}}$

question 109

Multiple Choice

Under the percentage-of-completion method, how should earned but unbilled revenues on a long-term contract be disclosed on the statement of financial position?

• A) as \(\bold{\text{contract asset/liability}}\) in the current asset section
• B) as \(\bold{\text{contract asset/liability in}}\) the noncurrent asset section
• C) as a receivable in the noncurrent asset section
• D) in a note to the financial statements until the customer is formally billed for the portion of work completed

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Definitions:

AC

Alternating Current refers to an electrical current that periodically changes its direction of charge flow.

DC

Direct Current, a type of electrical current where the flow of electric charge is only in one direction.

Shading Coil

A large copper wire or band connected around part of a magnetic pole piece to oppose a change of magnetic flux.

Shaded-pole Induction Motor

A type of single-phase induction motor which operates by creating a rotating magnetic field using a shading coil.