The annual entries to record costs of construction, progress billings, and collections from customers under the completed-contract method would be identical to those illustrated under the percentage-of- completion method with the significant exclusion of the recognition of revenue and gross profit.

Question

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Under the completed-contract method, revenue and gross profit are recognized only when the contract is completed, unlike the percentage-of-completion method where they are recognized as the work progresses. However, the entries for costs, billings, and collections are similar in both methods.

The Annual Entries to Record Costs of Construction, Progress Billings