If a company uses the completed contract method rather than the percentage of completion method, the total proﬁt the company recognizes from the beginning of the project throughout its completion will be which of the following?
A) Greater if the completed contract method is used.
B) Greater if the percentage of-completion method is used.
C) The same for both methods.
D) Greater for the completed-contract method only if the project takes longer than ﬁve years to complete.

Question

Quizplus · Accepted Answer

The total profit recognized over the life of the project will be the same for both the completed contract method and the percentage of completion method. The difference between the two methods lies in the timing of when the profit is recognized, not the total amount of profit recognized.

If a Company Uses the Completed Contract Method Rather Than