Garcon Building Ltd.is a construction company located in Toronto.The company is responsible for several large building complexes currently being constructed in the Toronto area.Total revenue and costs can be readily estimated and each contract is expected to take several years to complete.Garcon is most likely to recognize revenue using which method?
A)Percentage of completion method
B)Instalment method
C)At the time of contract signing
D)Completed-contract method

Question

Quizplus · Accepted Answer

Since each contract is expected to take several years to complete and both total revenue and costs can be estimated, Garcon Building Ltd. is most likely to recognize revenue using the percentage of completion method. This method recognizes revenue and expenses as work is completed and it is suitable for long-term projects where the outcome can be estimated with reasonable accuracy.