With respect to delaying revenue recognition until completion of a long-term contract, it is the case that:
A) Estimated losses on the overall contract are recognized before the contract is completed.
B) Expenses are recognized each period, but revenue is only recognized when the contract is completed.
C) Use of this approach is not permitted under generally accepted accounting principles.
D) Neither gains nor losses are recognized until the contract is completed.

Question

Quizplus · Accepted Answer

Even when revenue recognition over time is not appropriate, such that revenue recognition is delayed until the completion of a contract, estimated losses on the overall contract are recognized in the period in which the company realizes that those losses become evident.

With Respect to Delaying Revenue Recognition Until Completion of a Long-Term