How should the balances of Progress Billings and Construction in Progress be shown at reporting dates prior to the completion of a long-term contract?
A) Progress Billings as income,Construction in Progress as inventory
B) Net,as income from construction if credit balance,and loss from construction if debit balance
C) Progress Billings as deferred income,Construction in Progress as a current asset
D) Net,as a current asset if debit balance and current liability if credit balance

Question

Quizplus · Accepted Answer

Under the percentage-of-completion method for accounting for long-term contracts, the balances of Progress Billings and Construction in Progress are reported net on the balance sheet. If the net amount is a debit balance, it is shown as a current asset, indicating costs exceed billings. If it is a credit balance, it is shown as a current liability, indicating billings exceed costs.

How Should the Balances of Progress Billings and Construction in Progress