What are the two basic methods of accounting for longtermconstruction contracts? Indicate the circumstancesthat determine when one or the other of these methodsshould be used.

Q: t contract inception, PFRS 15 requires an entity to determine how the performance obligations…

A: Contract is a legal document or agreement between the two parties with their  mutual obligation.

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: Instruction: Using the expense method this time, prepare the original entry of the foregoing…

A: Adjusting entries are the journal entries which adjust the expenses and revenue in the year they…

Q: Demonstrate revenue recognition for long-term contracts, both at a point intime when the contract is…

A: Long term contracts usually qualify for revenue recognition over time. We recognise revenue over…

Q: which are the terms and conditions for OPTION CONTRACT WITH SIMULTANEOUS TITLE CLOSING?

A: The option contract is an obligation to purchase the property in the future at a fixed predefined…

Q: The third step in the process for revenue recognitio

A: REVENUE RECOGNITION shows the transfer of promised goods or services in an amount that reflects how…

Q: The ability to meet short term obligations is termed

A: A short-term liability is referred to as the financing obligation that being liable to an…

Q: What factors must any company consider before accepting a special-order contract?

A: Company has to consider following points while accepting special order: 1. Potential effect on sale…

Q: Describe the accounting and reporting for special features of lease arrangements.

A: Special features of lease arrangements: - Residual type - Sale type leases - Bargain purchase option…

Q: What is the concept of sale-leaseback agreement?

A:

Q: 1. Should the two contracts be combined for purposes of applying the five-step revenue recognition…

A:

Q: In accounting for a long-term construction contract using the percentage of completion method, the…

A: Percentage of completion method requires reporting of revenue and expenses period by period basis.

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.