If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?
A) percentage-of-completion method
B) deferral method
C) installment method
D) cost recovery method

Question

Quizplus · Accepted Answer

The percentage-of-completion method is most appropriate for long-term contracts involving significant production, modification, or customization. This method recognizes revenue based on the percentage of work completed as a proportion of total work to be done, rather than recognizing revenue all at once upon completion of the project. This method allows for more accurate revenue recognition over the life of the contract.

If a Company Had an Agreement to Deliver Software That