Explain the Accounting Procedure That Should Apply When a Construction

question 4

Essay

Explain the accounting procedure that should apply when a construction contract is expected to be completed at a loss.Use a simple numerical example to illustrate this procedure.How is this procedure affected if the completed-contract method is used for accounting for construction contracts rather than the percentage-of-completion method?

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Definitions:

Feasibility

The practicality or possibility of something being accomplished or achieved.

Decision Making

The process of selecting among various alternatives based on the analysis and evaluation of available information.

Working Model

A preliminary version of a product that demonstrates its functionality and features, often used for testing and feedback.

Communicate

The act of transferring or exchanging information, feelings, or ideas through speech, writing, signals, or behaviors.