All of the following accounts are impliedly contained in the account “Construction in Progress” except: a. Progress Billings to date b. Costs incurred to date c. Gross Profit to date d. Contract Revenue to date

All of the following accounts are impliedly contained in the account “Construction in Progress” except: a. Progress Billings to date b. Costs incurred to date c. Gross Profit to date d. Contract Revenue to date

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 25GI

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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

All of the following accounts are impliedly contained in the account “Construction in Progress” except:

a. Progress Billings to date

b. Costs incurred to date

c. Gross Profit to date

d. Contract Revenue to date

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All of the following accounts are impliedly contained in the account "Construction in Progress” except: A. Progress Billings to date B. Costs incurred to date C. Contract Revenue to date D. Gross Profit to date S1: Zero Profit Method in revenue recognition principle recognized income upon the completion a construction contract S2: A contract asset exists when Contract revenue to date is less than progress billings to date A. Both are true B. Both are false C. s1 True D. S2 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
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Partial satisfaction of a multiple performance obligation is reported on the balance sheet asa. contract liability.b. receivable.c. contract asset.d. unearned service revenue
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
1. All of the following accounts are impliedly contained in the account Construction in Progress except: A. Costs incurred to date B. Contract Revenue to date C. Gross Profit to date D. Progress Billings to date 2. S1: Zero Profit Method in revenue recognition principle recognizes income upon the completion a construction contractS2: A contract asset exists when Contract revenue to date is less than progress billings to date. A. Both are true B. Both are false C. S1 True D. S2 True
The third step in the process for revenue recognition is to (Enter 1, 2, 3, or 4 that represents the correct answer): determine the separate performance obligations in the contract. allocate transaction price to the separate performance obligations. determine the transaction price. determine the amount of revenue when each performance obligation is satisfied.
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…
Which of the following is not an accepted basis for recognition of revenue?A. Passage of timeB. Completion of percentage of a projectC. Performance of serviceD. Upon signing of contract
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.
The FASB has established a Five-Step process to recognize revenue. Which of the following is not one of those steps? A. Ability to identify the contract with the customer. B. Determination thatcollection of the entitled contractual consideration from the customer is probable. C. Properly identify all of the performance obligations within the contract. D. Ability to determine the transaction price. E. Properly identify all of the deliverables and allocate the transaction price to each.
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