KINDLY ANSWER WITH EXPLANATIONS. 1) Percentage of Completion is favored to be used under the following circumstances, exceptA. Contract Costs can be reliably estimatedB. Contract Price is assuredC. Progress Billings is assured of collectionD. Performance obligation can be reliably measured2) S1: Cost plus contract is a contract used on long term construction contracts in which thecontractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unitof output, which in some cases may be subject to cost escalation clauses. S2: Variable contractis a construction contract in which the contractor is reimbursed for allowable or otherwise definedcosts, plus a percentage of these costs or a fixed fee.A. Both are trueB. S1 True; S2 FalseC. Both are falseD. S2 True; S1 False3) Which of the following shall be excluded in the contract costs of a construction contract?A. Costs that directly relate to the specific contractB. Selling costs such as advertisement expense or commissions of real estate agents or brokersC. Costs that are directly attributable to contract activity in general and can be allocated to thecontractD. Such other costs as are specifically chargeable to the customer under the terms of the contract4) S1: Zero Profit Method in revenue recognition principle recognizes income upon the completiona construction contractS2: A contract asset exists when Contract revenue to date is less thanprogress billings to dateA. S2 TrueB. Both are trueC. Both are falseD. S1 True5) All of the following accounts are impliedly contained in the account "Construction in Progress"exceptA. Contract Revenue to dateB. Gross Profit to dateC. Progress Billings to dateD. Costs incurred to date

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1) Percentage of Completion is favored to be used under the following circumstances, except A. Contract Costs can be reliably estimated B. Contract Price is assured C. Progress Billings is assured of collection D. Performance obligation can be reliably measured

1) Percentage of Completion is favored to be used under the following circumstances, except A. Contract Costs can be reliably estimated B. Contract Price is assured C. Progress Billings is assured of collection D. Performance obligation can be reliably measured

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 3Q

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Percentage of Completion is favored to be used under the following circumstances, except: a. Progress Billings is assured of collection b. Performance obligation can be reliably measured c. Contract Price is assured d. Contract Costs can be reliably estimated
1. When outcome of a construction contract is estimated reliably, contract revenue and contract costs associated with the construction contract should be recognized using * A. cost recovery method B. percentage of completion method C.gross profit method D.zero profit method.
Which of the following shall be excluded in the contract costs of a construction contract? * A. Costs that are directly attributable to contract activity in general and can be allocated to the contract B. Costs that directly relate to the specific contract C. Such other costs as are specifically chargeable to the customer under the terms of the contract D. Selling costs such as advertisement expense or commissions of real estate agents or brokers Percentage of Completion is favored to be used under the following circumstances, except A. Progress Billings is assured of collection B. Contract Price is assured C. Performance obligation can be reliably measured D. Contract Costs can be reliably estimated S1: Cost plus contract is a contract used on long term construction contracts in which the contractor agrees to a contract price that is fixed, either at the inception or at a fixed rate per unit of output, which in some cases may be subject to cost escalation clauses.S2: Variable…
In accounting for a long-term construction contract using the percentage of completion method, the progress billings on contract account is a * A. noncurrent liability B. revenue account C. contra noncurrent liability D.contra current asset account
Which statement is true when the outcome of construction contract cannot be estimated reliably? a. Contract costs shall be recognized as an expense in the period when incurred. b. Revenue shall be recognized only to the extent of contract costs incurred that is probable will be recoverable c. All of these statements are true. d. An expected loss on the construction contract shall be recognized as an expense immediately.
The cost-plus approach: a. refers to contracts that are modified from their original terms during the course of the contract. b. refers to contracts where the contractor is not expected to recover all costs incurred in completing the project. c. is not allowed under ASC Topic 606 guidance for revenue recognition. d. uses an assumed reasonable profit margin to determine the stand-alone price.
If the outcome of a long-term contract can be measured reliably, the preferred accounting method under both IFRS and US GAAP is: A . the cost recovery method.
If the Construction in Progress account is greater than the Contract Billings, the excess is treated as * A. current liability B. current asset C. loss D.income
When the outcome of a construction contract cannot be estimated reliably, how shall contract revenue and contract costs associated with the construction contract be recognized? Group of answer choices They shall be recognized as revenue and expenses respectively by reference to the state of completion of the contract activity at the end of the reporting period also known as by percentage of completion method. They shall be recognized as revenue and expenses respectively by the date of earning of revenue or incurring of expenses also known as accrual method. They shall be recognized as revenue and expenses respectively by reference to the percentage of collection of receivables from customers also known as by installment method. Revenue shall be recognized only to the extent of contract cost incurred that is probable will be recoverable and the contract cost shall be recognized as an expense in the period in which there are incurred also known as cost recovery or zero-profit…
Statement I: IFRS 15 prescribes specific estimation techniques for variable consideration and only permits variable amounts to be included to the extent that it is probable that the revenue will not reverse.Statement Il: Transaction price (at inception) should be allocated to all the performance obligations in the contract in proportion to the cost of each performance obligation. • True, True • True, False • False, False • False, True
David Mendez Under the percentage-of-completion method, how should the balances of progress billings and construction in process be disclosed in the financial statements prior to the completion of the contract? net, as income from construction if a credit balance, and loss from construction if a debit balance progress billings as deferred income, construction in progress as a deferred expense net, as a current asset if a debit balance, and a current liability if a credit balance progress billings as income, construction in process as inventory
Indicate whether each of the following statements is true or false. Farhgate Inc. should recognize revenue when the performance obligation has been satisfied and when cash is received. Answer If Massy sells its product but gives the buyer the right to return it, Massy should not recognize revenue until the sale is collected. Answer If it is difficult to determine the outcome of the contract (estimating costs and determining project revenue), IFRS requires the application of the zero-profit method. Answer