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?

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: If a contract modification adds distinct goods or services and the contract price increases by an…

A: Any modification in the price or scope or both with regard to a contract by the parties to the…

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: 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: Which one of the following statement about encumbrance is correct? a. Encumbrances are equivalent to…

A: Encumbrances denote the estimated expenditures before the actual expenditure is occurred. It…

Q: When is an estimated loss on a long-term contract recognized, both for contracts that recognize…

A: Revenue recognized point of long term contract: A long-term contract qualifies for revenue…

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: 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: For what reasons should the percentage-of-completionmethod be used over the completed-contract…

A: Completed contract method: In this method the revenue and profit are recognized only after the…

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: 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: What is the difference between the assignment of a take-out commitment to the construction lender…

A: Take-out commitment is an agreement between lender and borrower in which lender provides guarantee…

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: Explain the doctrine of the indoor management rule in relation to a company entering into a…

A: It is often seen that the outsiders who contracts with the companies used to face…

Q: What are the two types of losses that can become evidentin accounting for long-term contracts? What…

A: The two types of losses that can become evident while accounting for long-term contracts are:(1) A…

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: What two methods are identified in the Codification as appropriate in accounting for long-term…

A: Long term Construction Contract Construction contract are in different type in accordance with need…

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: Under IFRS 15, when shall the incremental cost of obtaining a contract with a customer be recognized…

A: IFRS (International financial reporting standards) refer to a set of accounting guidelines and rules…

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

A: IAS 11 prescribes the contractor’s accounting treatment of revenue and costs associated with…

Q: What are the two basic methods of accounting for long term construction contracts? Indicate the…

A: Explain the two basic methods of accounting for long term construction contracts: The two basic…

Q: If the outcome of a long-term contract can be measured reliably, the preferred accounting method…

A: Long term contracts are those contracts which are related to construction of building. Usually long…

Q: ll require the use of current assets. Payment of the obligation must be probable. The compensation…

A: The correct option is given as,

Q: Describe the conditions when contract assets and liabilitiesare recognized and presented in…

A: Contract assets: It is the right of the firm to receive payment for the goods transferred or…

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: Explain the reporting for (a) costs to fulfill a contract and (b) collectibility.

A: Fulfillment costs are divided into two categories: (1) Those that arise from assets; (2) Those that…

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

A: Answered:

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: eives a contract to build a building to the performance of the contract is sum over

A: Given: To calculate the contract revenue amount in 2019 as,

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:

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