Which statement about the percentage of completion method is correct?
A)This method recognizes revenue on a straight-line basis.
B)This method can only be used if there are no uncertainties about how much the contract will cost or how long it will take to complete.
C)This method allocates revenue, not construction costs.
D)This method allocates construction costs, not revenue.

Question

Quizplus · Accepted Answer

The percentage of completion method allocates both revenue and construction costs based on the progress towards completion of a contract, not just construction costs. This method is used in long-term contracts to recognize revenue and expenses in proportion to the work completed, which can include both costs and revenue allocation.

Which Statement About the Percentage of Completion Method Is Correct