The percentage- of -completion method of accounting for long-term construction-type contracts is preferable when estimates of costs to complete and extent of progress toward completion are reasonably dependable.

Question

Quizplus · Accepted Answer

The percentage-of-completion method is indeed preferable when estimates of costs to complete and extent of progress toward completion are reasonably dependable. This is because this method recognizes revenue and expenses progressively as the contract progresses, providing a better reflection of the economic reality of the situation. However, if estimates are not reliable, the completed-contract method may be more suitable.

The Percentage- of -Completion Method of Accounting for Long-Term Construction-Type