When both the total profit on the contract and the progressive degree of completion during construction can be reliably estimated,a construction firm should record income on a long-term construction project using the:
A)percentage of completion method.
B)sales method.
C)instalment method.
D)collection method.

Question

Quizplus · Accepted Answer

The percentage of completion method should be used when both the total profit on the contract and the progressive degree of completion during construction can be reliably estimated. Under this method, revenue is recognized based on the percentage of work completed. This method provides a more accurate picture of the financial performance of the project and matches expenses with revenue as they are incurred, resulting in a more accurate measurement of profitability.

When Both the Total Profit on the Contract and the Progressive