When it is probable that total contract costs will exceed total contract revenue, how shall the long-term contractor account for the difference?  Group of answer choices  a. The expected profit shall be recognized as a profit immediately.  b. The expected loss shall be recognized as an expense taking into account the percentage of completion as of the end of the period.  c. The expected loss shall be recognized as a profit taking into account the percentage of completion as of the end of the period.  d. The expected loss shall be recognized as an expense immediately.

Q: A method of reporting income that is used when collection can be made over a relatively long periods…

A: Income refers to the revenue which is earned through business from selling the goods and services.

Q: t contract inception, PFRS 15 requires an entity to determine how the performance obligations…

A: Contract is a legal document or agreement between the two parties with their  mutual obligation.

Q: Based on the requirements and guidance of IFRS 15, one of the following is not considered part of…

A: Under the contract costing, there is an agreement made between two parties in respect of performing…

Q: Demonstrate revenue recognition for long-term contracts, both at a point intime when the contract is…

A: Long term contracts usually qualify for revenue recognition over time. We recognise revenue over…

Q: The primary issue in the accounting for construction contracts is   the determination of the…

A: Construction contract:     It is the contract between the parties that include all details of…

Q: How is the total payment under a unit-price contract determined? When is such a contract likely to…

A: Unit price contract is a common pricing contract which is based on each unit or task of the…

Q: Which of the following costs shall from part of contract costs of long-term construction contract?…

A: Following is the answer to the given question

Q: When should a company recognize revenue under GAAP? Multiple Choice When the promised performance…

A: According to generally accepted accounting principles (GAAP), the following two criteria must be…

Q: Percentage of Completion is favored to be used under the following circumstances, except:   a.…

A: The percentage of completion method reports revenues and expenses in terms of the work completed to…

Q: f the Construction in Progress account is greater than the Contract Billings, the excess is treated…

A: Construction in progress means the contracts' work which still going on and is yet to be completed.

Q: Which one of the following accounts is an asset similar to work-in-process inventory? Group of…

A: An asset refers to the resource of the business that can be utilized for the purpose of revenue…

Q: When it is probable that total contract costs will exceed total contract revenue, how shall the…

A: SOLUTION CONTRACT COST IS THE TRACKING OF  COSTS ASSOCIATED WITH A SPECIFIC CONTRACT WITH A CUSTOMER…

Q: S1: Zero Profit Method in revenue recognition principle recognizes income upon the completion a…

A: S1: The Zero Profit Method of revenue recognition recognises income when a construction contract is…

Q: Which of the following is considered a fixed cost? a) rent expense b) marketing costs record…

A: The manufacturing company has undergone many costs. The process of the product will resulted in to…

Q: Identify the proper accounting for losses on long-term contracts.

A: Revenue recognition: Revenue recognition principle states that every business organization should…

Q: Explain an example of long-term construction contracts qualify for revenue recognition over time.

A: As per Accounting Standards Codification, revenue should be recognised when the seller satisfies…

Q: In accounting for a long-term construction contract using the percentage of completion method, the…

A: Percentage of completion method requires reporting of revenue and expenses period by period basis.

Q: Loss contingencies are usually recognized in the income statements of the period when     a.…

A: Solution; Loss contingencies are usually recognized in the income statements of the period when…

Q: Any anticipated loss should be recognized * A.on a percentage basis during the contract period B.…

A: The amount of anticipated loss is calculated regardless of: (a) whether or not work on the contract…

Q: Under PFRS 15, how does a consignor satisfy its performance obligation under consignment contract?…

A: SOLUTION-   EXPLANATION-  A PERFORMANCE OBLIGATION IS SATISFIED BY TRANSFERRING A PROMISED GOOD OR…

Q: age of time B. Completion of percentage of a project C. Performan

A: Revenue refers to the sum value of money gained by a business by selling its goods or services in…

Q: A liability for compensated absences such as vacations, for which it is expected that employees will…

A: The compensation expense is the expense for which liability is recorded on the basis of future…

Q: When the outcome of a construction contract cannot be estimated reliably, how shall contract revenue…

A: when the outcome of a construction contract can be estimated reliably, contract revenue and contract…

Q: Which one among the following conditions is NOT a condition of Murabaha:   - Payment may be made…

A: Murabaha, also known as cost-plus finance, is an Islamic financing system in which the buyer and…

Q: Partial satisfaction of a multiple performance obligation is reported on the balance sheet asa.…

A: Performance obligation: A performance obligation is a promise made by a seller to transfer the goods…

Q: Which of the following statements is true about initial direct costs? A. Initial direct costs of a…

A: According to the Generally Accepted Accounting Principle, initial direct cost is defined as the…

Q: When outcome of a construction contract is estimated reliably, contract revenue and contract costs…

A: Solution: As per IAS 11, "when the outcome of a construction contract can be estimated reliably,…

Q: The cost-plus approach:   a. refers to contracts that are modified from their original terms…

A: Cost plus contract means a contract in which buyer agrees to pay the  contractor all the Cost plus a…

Q: In light of your study of the main conditions mentioned in the definition, mention why are or are…

A: An asset is a resource with the financial worth that an individual, enterprise, or nation possesses…

Q: Which of the following shall be excluded in the contract costs of a construction contract? * A.…

A: Contract costs should comprise:(a) costs that relate directly to the specific contract;(b) costs…

Q: How much must be shown as current asset (cost of uncompleted contract in excess of billings) in the…

A: Current Assets are the group of assets held by the business or a company for the purpose of regular…

Q: REQUIRED: a. Apply the full cost ceiling test and record any entries necessary, assuming that all…

A: Cost accounting: The branch of accounting that provides the information regarding the cost incurred…

Q: #14  How should the balances of Progress Billings and Construction in Process be shown at reporting…

A: Introduction: Progress billing is a form of invoicing that ensures a consistent payment schedule…

Q: Under the completed-contract method,   Question 16 options: a revenue, cost, and gross profit are…

A: Under the completed-contract method,                     The total revenues, total costs incurred,…

Q: What amount of RGP should be reported for the current year if the percentage of completion method is…

A: Answered:

Q: All revenue from construction contracts is always recognized over time. O True O False

A: A construction contract is a legal, valid, and mutual contract between two different parties. The…

Q: Assuming the requirements for recognizing revenue over time are met, the profit to be recognized in…

A: Under construction contract, the profit is recognised on the basis of the costs incurred during the…

Q: Which of the following journal entries is not made in the first period of a long-term contract if…

A: In case of long term contract , we can show proportionate profit every year depending on following…

Q: . An entity has agreed to a three-year contract with a customer. Recognizing revenue from long-term…

A: As per IFRS15 Revenue recognition,  Revenue is to be recognized over a period of time if any one of…

Q: how long-term construction contract are accounted for and some of the issues that are faced for…

A: Long-term construction contract is reported in financial statements is as follows: At the end of…

Q: This method of accounting for long-term contracts has the advantage of recognizing project income…

A: Solution: Percentage of completion method of accounting for long term contracts has the advantage of…

Q: For contracts which are very near to completion, the profit is ascertained by the formula-

A: Every contract takes 2 to 5 years to complete. Actual profit can be calculated at the end of…

Q: When percentage-of-completion accounting is not appropriate, U.S. GAAP requires the use of the…

A:

Q: 1) Percentage of Completion is favored to be used under the following circumstances, except A.…

A: We will answer the first question since the exact one is not specified. Please submit new question…

Q: What are the repercussions of taking profit before the contracting company's obligations have…

A: Financial obligations are the obligations, which are referred to as the responsibility of an…

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.