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- 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 accountWhich 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.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.
- 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 inventoryPartial satisfaction of a multiple performance obligation is reported on the balance sheet asa. contract liability.b. receivable.c. contract asset.d. unearned service revenueAny anticipated loss should be recognized * A.on a percentage basis during the contract period B. when all costs are recognized C.in the future D.in the period it is determined
- 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 TrueWhen 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
- true or false The net defined benefit liability/asset that is presented in the balance sheet is the difference between the FVTA and the PV of DBO, subject to the asset ceiling if appropriate.When it is probable that total contract costs will exceed total contract revenue, how shall it be accounted for? Group of answer choices The expected loss shall be recognized as an expense immediately only when the outcome of a construction contract cannot be estimated reliably. The expected loss shall be recognized as an expense immediately regardless of the certainty or uncertainty of the outcome of a construction contract. The expected loss shall be accounted for based on company’s policy. The expected loss shall be recognized as an expense by reference to the state of completion of the contract activity at the end of the reporting period when the outcome of a construction contract cannot be estimated reliably. PreviousNext1. 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