In selecting an accounting method for a newly contracted long-term construction project under private entity GAAP, the principal factor to be considered should be
A)the terms of payment in the contract.
B)the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable.
C)the method commonly used by the contractor to account for other long-term construction contracts.
D)the inherent nature of the contractor's technical facilities used in construction.

Question

Quizplus · Accepted Answer

The degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable is the primary factor to consider when selecting an accounting method for a long-term construction project under private entity GAAP. This will determine whether the percentage-of-completion method or completed-contract method should be used. Other factors may also be considered, but this is the most important consideration.

In Selecting an Accounting Method for a Newly Contracted Long-Term