The cost-plus approach:   a. refers to contracts that are modified from their original terms during the course of the contract.   b. refers to contracts where the contractor is not expected to recover all costs incurred in completing the project.   c. is not allowed under ASC Topic 606 guidance for revenue recognition.   d. uses an assumed reasonable profit margin to determine the stand-alone price.

Q: If a contract modification adds distinct goods or services and the contract price increases by an…

A: Any modification in the price or scope or both with regard to a contract by the parties to the…

Q: Which of the following statements regarding the recognition of expenses related to long-term…

A: Recognition of expenses in accounting refers to the process of recording and reporting the costs…

Q: Farhgate Inc. should recognize revenue when the performance obligation has been satisfied and when…

A: Farhgate Inc. should recognize revenue when the performance obligation has been satisfied and when…

Q: Which of the following costs shall from part of contract costs of long-term construction contract?…

A: Following is the answer to the given question

Q: Revenue should be recognized over time when a performance obligation is satisfied over time. That…

A: Given statement is: Revenue should be recognized over time when a performance obligation is…

Q: S1: Zero Profit Method in revenue recognition principle recognizes income upon the completion a…

A: S1: The Zero Profit Method of revenue recognition recognises income when a construction contract is…

Q: Direction: Choose the correct answer.  1. A provision is a. An event which is not recognized…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Which of the following statements is true regarding contracts in ASC Topic 606 guidance for revenue…

A: As per ASC 606, A contract is an agreement between two or more parties that creates enforceable…

Q: Which statement is true when the outcome of construction contract cannot be estimated reliably?…

A: As per AS-7, the accounting treatment of construction contract with respect to recognition of…

Q: Which one among the following conditions is NOT a condition of Murabaha:   - Payment may be made…

A: Murabaha, also known as cost-plus finance, is an Islamic financing system in which the buyer and…

Q: rationale for recognizing revenue over the life of a contract rather than at a single point in time…

A: Revenue refers to the sum of money generated by an individual or any business entity through its…

Q: Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is…

A: In accounting, ASC stands for Accounting Standards Codification as defined by the financial…

Q: Under PFRS 15, what is the measurement basis of revenue from contracts with customers? Select the…

A: Revenue recognizes steps: Identify the contract with a customer Identify the performance…

Q: When it is probable that total contract costs will exceed total contract revenue, how shall it be…

A: Contract account is prepared when the work to be done take substantial time to make (generally more…

Q: Under the completed-contract method,   Question 16 options: a revenue, cost, and gross profit are…

A: Under the completed-contract method,                     The total revenues, total costs incurred,…

Q: 33. Entity A enter into a long-term contract to provide service. The outcome of the transaction can…

A: Long term contract of service are those contracts in which there is an agreement between two parties…

Q: Which of the following journal entries is not made in the first period of a long-term contract if…

A: In case of long term contract , we can show proportionate profit every year depending on following…

Q: If the outcome of a long-term contract can be measured reliably, the preferred accounting method…

A: The percentage of completion method is an accounting technique in which long-term deed income and…

Q: . An entity has agreed to a three-year contract with a customer. Recognizing revenue from long-term…

A: As per IFRS15 Revenue recognition,  Revenue is to be recognized over a period of time if any one of…

Q: If an entity recognises the revenue associated with a contract with a customer over time (rather…

A: The question pertains to which of the two scenarios would be a more conservative approach : 1.…

Q: For contracts which are very near to completion, the profit is ascertained by the formula-

A: Every contract takes 2 to 5 years to complete. Actual profit can be calculated at the end of…

Q: When percentage-of-completion accounting is not appropriate, U.S. GAAP requires the use of the…

A:

Q: What are the repercussions of taking profit before the contracting company's obligations have…

A: Financial obligations are the obligations, which are referred to as the responsibility of an…

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.