Under the earnings approach, 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

Question

Quizplus · Accepted Answer

Under the percentage-of-completion method, earned but unbilled revenues on long-term construction contracts should be recognized as construction in process in the current asset section of the balance sheet. This is because the work has been completed and revenue has been earned, but it has not yet been billed to the customer.

Under the Earnings Approach, How Should Earned but Unbilled Revenues