The completed contract method of accounting for long-term construction-type contracts is preferable when:
A) Estimates of costs to complete and extent of progress toward completion are reasonably dependable.
B) The contracts are of a relatively long duration.
C) A contractor is involved in numerous projects.
D) Lack of dependable estimates or inherent hazards cause forecasts to be doubtful.

Question

Quizplus · Accepted Answer

The completed contract method is preferable when estimates are not dependable or when the project involves inherent hazards that make forecasts doubtful, as it defers revenue and expense recognition until the contract is completed, avoiding the potential for significant adjustments due to unreliable estimates.

The Completed Contract Method of Accounting for Long-Term Construction-Type Contracts