This method of accounting for long-term contracts has the advantage of recognizing project income periodically on a current basis, rather than irregularly as contracts are completed. Percentage of completion - capitalized cost method Percentage of completion method Completed contract method Incomplete contract method

This method of accounting for long-term contracts has the advantage of recognizing project income periodically on a current basis, rather than irregularly as contracts are completed. Percentage of completion - capitalized cost method Percentage of completion method Completed contract method Incomplete contract method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Describe the accounting and amortization of prior service costs.
Under the completed-contract method, Question 16 options: a revenue, cost, and gross profit are recognized at the time the contract is completed. b revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed. c revenue, cost, and gross profit are recognized during the production cycle. d None of these answers are correct.
Explain the reporting for (a) costs to fulfill a contract and (b) collectibility.
Define amortization expense
Choose the appropriate definition for each term. Term Amortization Useful life Licensing right Least and latest rule Component allocation Fixed asset turnover ratio Depreciable cost Copyright Depreciation schedule Revenue expenditures 2 Definition
In computing DD&A for a full cost company: Group of answer choices A. Leasehold cost is amortized over proved reserves and IDC and lease and well equipment are amortized over proved reserves. B. Leasehold cost is amortized over proved reserves and IDC and lease and well equipment are amortized over proved developed reserves. C. Leasehold cost is amortized over proved developed reserves and IDC and lease and well equipment are amortized over proved reserves. D. Leasehold cost is amortized over proved developed reserves and IDC and lease and well equipment are amortized over proved developed reserves.
All revenue from construction contracts is always recognized over time. T/F
Explain how to Determining Whether a Contract Exists for Revenue Recognition Purposes.
how long-term construction contract are accounted for and some of the issues that are faced for financial reporting purposes.
Research & Development costs: A)Are included in the cost of a patent on the balance sheet B) Should be expensed C) Are amortized over the useful life of the patent D) Both A&B are correct
For contracts which are very near to completion, the profit is ascertained by the formula- a.Estimated profit x work certified/contract price b.Estimated profit x work certified/contract price x cash received/work certified c.Estimated profit x work certified/contract price x cost of work/total cost to date d.2/3 x Notional profit x cash received/work certified.
When percentage-of-completion accounting is not appropriate, U.S. GAAP requires the use of the completedcontract method, while IFRS requires the use of the cost recovery method. Explain how the two methods affectrecognition of revenue, cost of construction, and gross profit over the life of a profitable contract.