Cost estimates at the end of the second year indicate that a loss will result on completion of the entire contract.Which of the following statements is correct?
A)Under the cost-recovery method, the loss is not recognized until the year the construction is completed.
B)Under the percentage-of-completion method, the gross profit recognized in the first year does not affect the computation of loss for the second year.
C)Under the cost-recovery method, when the billings exceed the accumulated costs, the amount of the estimated loss is reported as a current liability.
D)Under the cost-recovery method, when the Construction in Process balance exceeds the billings, the estimated loss is added to the accumulated costs.

Question

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The Answer of Cost estimates at the end of the second year indicate that a loss will result on completion of the entire contract.Which of the following statements is correct?
A)Under the cost-recovery method, the loss is not recognized until the year the construction is completed.
B)Under the percentage-of-completion method, the gross profit recognized in the first year does not affect the computation of loss for the second year.
C)Under the cost-recovery method, when the billings exceed the accumulated costs, the amount of the estimated loss is reported as a current liability.
D)Under the cost-recovery method, when the Construction in Process balance exceeds the billings, the estimated loss is added to the accumulated costs.

Cost Estimates at the End of the Second Year Indicate