The provision for a loss on an unprofitable contract may be combined with the Construction in Process account balance under percentage-of-completion but not completed-contract.

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Under the percentage-of-completion method, the provision for a loss on an unprofitable contract is recognized immediately in the income statement, rather than being combined with the Construction in Process account balance. Under the completed-contract method, losses are also recognized immediately when they become evident.

The Provision for a Loss on an Unprofitable Contract May