When Accounting for Revenue Over Time for a Long-Term Contract

question 252

Multiple Choice

When accounting for revenue over time for a long-term contract, the percentage of completion used to recognize revenue in the first year usually is determined by measuring:

• A) Costs incurred in the first year, divided by estimated remaining costs to complete the project.
• B) Costs incurred in the first year, divided by estimated total costs for the completed project.
• C) Costs incurred in the first year, divided by estimated gross profit.
• D) Costs incurred in the first year, divided by estimated total costs to be incurred in the remaining years of the project.

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Definitions:

Financial Statements

Reports prepared by a company that give stakeholders an overview of the company's financial condition, including balance sheets, income statements, and cash flow statements.

Disclosure in Notes

Providing additional information and context to items in the financial statements within the notes section, aiding in transparency and understanding.

IFRS

International Financial Reporting Standards, which are a set of accounting standards developed by the International Accounting Standards Board for global use.

U.S.GAAP

Refers to the Generally Accepted Accounting Principles in the United States, which are a set of rules and standards used for accounting and financial reporting.