Which of the following statements is incorrect with respect to revenue recognition of construction contracts?
A) The percentage-of-completion method is to be applied for fixed price contracts if the recognition criteria are satisfied.
B) AASB 111 requires individual construction contracts to be accounted for separately and the requirements of the standard to be applied separately to each contract.
C) The percentage-of-completion method should be used, provided certain conditions are met that enable the outcome of the contract to be reliably estimated.
D) Percentage-of-completion method requires contract revenue to be matched with progress billings, resulting in the reporting of revenue, expenses and profit which can be attributed to the amount billed to customers.
E) E: All of the given answers.

Question

Quizplus · Accepted Answer

The percentage-of-completion method requires contract revenue to be matched with the stage of completion of the contract, not with progress billings. Progress billings are not necessarily indicative of the work completed.

Which of the Following Statements Is Incorrect with Respect to Revenue