For fixed-price construction contracts that require more than one accounting period to complete and for which the costs can be reasonably estimated, revenue should be recognized
A)during production
B)at the completion of production
C)when title to the project is transferred to the buyer
D)when the cash is received from the buyer

Question

Quizplus · Accepted Answer

Revenue for fixed-price construction contracts that span more than one accounting period and have estimable costs is recognized over time, typically as the work progresses, which aligns with recognizing revenue during production. This approach is consistent with the percentage-of-completion method, allowing revenue and expenses to be recognized in the accounting periods in which the work is performed.

For Fixed-Price Construction Contracts That Require More Than One Accounting