Which revenue recognition method yields the most accurate estimate of profits for long term contracts? A)...
Which revenue recognition method yields the most accurate estimate of profits for long term contracts?
|
|||
|
|||
|
|||
|
Homework Answers
The correct answer is option B i.e. percentage of Completion method
In percentage of completion method there is a contract and there is reliable estimate of revenue, costs, and progress of completion.
This method recognises profit as a percentage of cost incurred to total estimated cost.
Percentage Completion method = cost incurred till date / total cost estimated (recent)
This method shows the relationship among the income statement, cash flow statement and the balance sheet.
This method is preferred because it shows better measure of operating activities. It also shows the complete and whole picture of incomplete contracts.
| Please do upvote if you found the answer useful. |
| Feel free to reach in the comment section in case of any clarification or queries. |
Add Answer to:
Which revenue recognition method yields the most accurate
estimate of profits for long term contracts?
A)...
Two methods used to account for revenue recognition for long term contracts are the percentage-of-completion method...
Two methods used to account for revenue recognition for long term contracts are the percentage-of-completion method and the ________. completed-contract method sales method cost recovery method installment sales method
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one...
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one year to complete), the two methods commonly followed are percentage-of-completion and completed- contract Instructions (a) Discuss how earnings on long-term construction contracts are recognized and computed under these two methods. (b) Under what circumstances should one method be used over the other? (c) How are job costs and interim billings reflected on the balance sheet under the percentage-of-completion method and the completed-contract method?
1. Assurning a long-term construction project makes an overall profit, during the interim years, percentage of...
1. Assurning a long-term construction project makes an overall profit, during the interim years, percentage of completion method accounting has impact on construction company's: Income Statement ONLY X Balance Sheet ONLY BOTH Income Statement and Balance Sheet None of the above 2. When a company write-off a bad debt under GAAP, it has impact on this company's: Income Statement ONLY Balance Sheet ONLY BOTH Income Statement and Balance Sheet Cash Flow Statement ONLY х 3. For a construction company working...
True or False Under the new “Revenue Recognition” accounting principles, firms with long-term contracts will be...
True or False Under the new “Revenue Recognition” accounting principles, firms with long-term contracts will be required to breakdown and allocate the total cost and price of the contract into various segments, and recognize revenues, costs, and profits for these segments.
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts. The discussion...
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts. The discussion focused on which method was most like the typical revenue recognition method of recognizing revenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supported recognizing revenue over time, stating that it was analogous to accruing revenue as a performance obligation was...
Distinguish among the percentage-of-completion, cost recovery, and completed contract methods of accounting for long-term contracts with...
Distinguish among the percentage-of-completion, cost recovery, and completed contract methods of accounting for long-term contracts with respect to income recognition. Under what circumstances should a company use the cost recovery method or the completed contact method?
Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9]...
Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2021 $ 360,000 1,440,000 500,000 445,000 2022 $2,155,000 0 1,770,000 1,825,000...
E6.37 (LO 12) (Recognition of Profit on Long-Term Contract) Vaughn Enterprises Ltd. has entered into a...
E6.37 (LO 12) (Recognition of Profit on Long-Term Contract) Vaughn Enterprises Ltd. has entered into a contract beginning in February 2020 to build two warehouses for Atlantis Structures Ltd. The contract is a non-cancellable fixed price contract for $10 million. The following data pertain to the construction period (all figures in thousands). 2020 2021 2022 Costs for the year $3,825 $4,675 $1,200 Estimated costs to complete 4,675 1,270 –0– Progress billings for the year (non-refundable) 3,500 4,100 2,400 Cash collected...
Why does the billings method for revenue recognition yield an in-accurate income statement? A) It suffers...
Why does the billings method for revenue recognition yield an in-accurate income statement? A) It suffers from the practice called “front-end loading”. B) It does not recognize receivables and payables C) It is based on estimates of work to be completed D) It only recognizes projects that are substantially complete
Question: Question:1. When the percentage-of-completion method of accounting for long-term contracts, the percentage of completion used to...
Question: Question:1. When the percentage-of-completion method of accounting for long-term contracts, the percentage of completion used to recognize gross profit in the first year usually is determined by measuring: a. costs incurred in the first year, divided by estimated remaining costs to complete the project. b. costs incurred in the first year, divided by estimated total cost of the completed project. c. costs incurred in the first year, divided by estimated gross profit. d. none of the above. 2.As of...
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one year to complete), the two methods commonly followed are percentage-of-completion and completed- contract Instructions (a) Discuss how earnings on long-term construction contracts are recognized and computed under these two methods. (b) Under what circumstances should one method be used over the other? (c) How are job costs and interim billings reflected on the balance sheet under the percentage-of-completion method and the completed-contract method?
1. Assurning a long-term construction project makes an overall profit, during the interim years, percentage of completion method accounting has impact on construction company's: Income Statement ONLY X Balance Sheet ONLY BOTH Income Statement and Balance Sheet None of the above 2. When a company write-off a bad debt under GAAP, it has impact on this company's: Income Statement ONLY Balance Sheet ONLY BOTH Income Statement and Balance Sheet Cash Flow Statement ONLY х 3. For a construction company working...
Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,750,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2021 $ 360,000 1,440,000 500,000 445,000 2022 $2,155,000 0 1,770,000 1,825,000...
Most questions answered within 3 hours.
-
find the critical value associated with a right sided hypothesis of
the mean using a sample...
asked 35 minutes ago -
Which of the following statements is true with respect to a
simple linear regression model?
a....
asked 1 hour ago -
The energy required to remove an electron from a surface of a
solid element is called...
asked 2 hours ago -
How would you train your employees to avoid risks of using
mobile devices?
asked 3 hours ago -
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 4 hours ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 4 hours ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 5 hours ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 6 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 6 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 7 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 9 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 9 hours ago