When losses occur on long-term contracts using the percentage-of-completion method,they are recognized
A)in their entirety as soon as it becomes known that a loss will be suffered.
B)at the completion of the project.
C)proportionately over the contract period using costs incurred as a base.
D)evenly over the contract perioD.

Question

Quizplus · Accepted Answer

Under the percentage-of-completion method, when it becomes evident that a loss will be incurred on a long-term contract, the entire expected loss is recognized immediately, regardless of the stage of completion. This approach ensures that financial statements reflect the most current and accurate financial position of the entity.

When Losses Occur on Long-Term Contracts Using the Percentage-Of-Completion Method,they