How should earned but unbilled revenues at the balance sheet date on a long-term construction contract be disclosed if the percentage-of-completion method of revenue recognition is used?
A) As construction in process in the current asset section of the balance sheet.
B) As construction in process in the noncurrent asset section of the balance sheet.
C) As a receivable in the noncurrent asset section of the balance sheet.
D) In a note to the financial statements until the customer is formally billed for the portion of work completed.

Question

Quizplus · Accepted Answer

Earned but unbilled revenues on a long-term construction contract, when using the percentage-of-completion method, are disclosed as construction in process in the current asset section of the balance sheet. This reflects the ongoing nature of the work and the expectation that these amounts will be billed and likely converted into cash within the normal operating cycle of the business.

How Should Earned but Unbilled Revenues at the Balance Sheet