Which of the following journal entries is not made in the first period of a long-term contract if the company cannot make reasonably dependable estimates of the progress toward satisfaction of the performance obligation? To record construction costs. To record partial billings. To record cash collections from the customer. To record gross profit.

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: 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: A client that recently loosened its credit-granting policies uses percentages of aging categories as…

A: Lets understand the basics. Management prepares allowance for doubtful debt account in order to…

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: 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: How do companies account for long-term contracts that qualify for revenue recognition over time?

A: The companies use the following two methods to record the long term contract when it turns out to be…

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: An auditor is skeptical about the assertion on the salary expenses. He collected information on the…

A: An audit can be defined as an inspection of books of accounts of a company to check whether the…

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: Which of the following statements is not applicable to contract acquisition costs under ASC Topic…

A: In the given case all of the following statements is applicable to contract acquisition costs under…

Q: Which of the following characteristic of a liability, if satisfied, would prompt the classification…

A: Current liabilities are a company's short-term financial obligations that are due within one year or…

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: Which statement is true when the outcome of construction contract cannot be estimated reliably?…

A: As per AS-7, the accounting treatment of construction contract with respect to recognition of…

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: 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: How should an analyst interpret fluctuations in estimate of useful life of asset for a given company…

A: Step 1 Whenever an entity purchases an asset, it always does fundamental analyzes and evaluates…

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: 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: All of Definitions of the financial failure confirm the project's inability to pay it current and…

A: solution concept financial failure                 Financial failure refer to the situation where…

Q: Cutoff tests designed to detect valid sales that occurred before the end of the year but have been…

A:

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: Sam MOnammed AISaadi Identify the incorrect statement from the following: If there is a delay in the…

A: Income Statement: It is a statement which of expenses and income incur during the operating period…

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: Assume that an auditor makes an agreement with a client that the audit fee will be contingent upon…

A: Audit: It is a systematic examination of books of accounts of an individual or a firm. It is done by…

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: Explain how to account for revenue on a long-term contract over time as opposed to at a point in…

A: The revenue recognition principle: The revenue recognition principle refers to the revenue that…

Q: Neither depreciation on replacement cost nor depreciation adjusted for changes in the purchasing…

A: Depreciation: Depreciation can be defined as the reduction in the value of an asset due to its wear…

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

A: Contract account is prepared when the work to be done take substantial time to make (generally more…

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: If a firm changes how they account for long-term contracts, what will be the proper accounting…

A: When accounting for a long-term construction contract for which revenue is recognized over time…

Q: A client’s purchasing system ends with the recording of a liability and its eventual payment. Which…

A: Completeness Assertions: The completeness assertion is to check that all the activities occurred…

Q: Which of the following is not a retrospective-type accounting change? A. Cost recovery method to…

A: Answer is option D) D. Percent of sales method to aging method in recognizing doubtful accounts.…

Q: 33. Entity A enter into a long-term contract to provide service. The outcome of the transaction can…

A: Long term contract of service are those contracts in which there is an agreement between two parties…

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

A: The percentage of completion method is an accounting technique in which long-term deed income and…

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: 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:

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.