(Answered)-8.3 LONG-TERM CONTRACT PROFIT RECOGNITION. Three alternative revenue recognition methods are...

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8.3     LONG-TERM CONTRACT PROFIT RECOGNITION. Three alternative revenue recognition methods are available to long-term contractors when cash inflows are probable: percentage of completion, completed contract, and cost recovery. Assuming that the contract price is known, discuss the appropriate method under U.S. GAAP and IFRS under two alternative scenarios: (a) the proportion of work performed and the proportion of work remaining until completion can be reliably determined and (b) no reliable basis exists for determining the total amount of work necessary to complete the project. (Note: Because percentage of completion is generally estimated by comparing the costs to date to expected total costs, the inability to estimate the total amount of work to be performed creates the inability to estimate percent complete reliably.)

 

Solution ID:10137833 | Question answered on 16-Oct-2016

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