Assume That McCombs Uses the Percentage-Of-Completion Method for Revenue Recognition

question 61

Essay

Assume that McCombs uses the percentage-of-completion method for revenue recognition.
Required: Compute the amount of gross profit recognized during 2008 and 2009.

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Definitions:

Factoring Transaction

The process where a business sells its accounts receivable (invoices) to a third party (factor) at a discount, in exchange for immediate cash.

GAAP

Generally Accepted Accounting Principles, a set of rules and standards designed to ensure consistency, fairness, and accuracy in financial reporting and accounting practices in the U.S.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is global in scope.

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party at a discount to obtain immediate cash.