Income Recognition - Chapter 4 "The Book" Study Questions
Terms in this set (10)
In 1981 the AICPA issued a new Audit and Accounting Guide, "Construction Contractors". Simultaneously, the AICPA issued a statement of Position 81-1 now known as:
Percentage of completion method
Of the two GAAP acceptable methods for income recognition, which one is more preferred?
Completed Contract Method
Which one of the following is an Acceptable income recognition methods in accordance with GAAP
Revenue, costs and gross profit are recognized in all accounting periods throughout the duration of the contract
Which income recognition method is considered the Percentage of Completion method?
Cash basis, Accrual (billing), Hybrid Basis
These methods are only acceptable for financial reporting in conformity with GAAP and not for revenue recognition
Completed contract method when contract is substantially completed and accepted
Revenue, costs and gross profits, when not recognized until the contract has been substantially completed and accepted is considered which income recognition method?
reasonably dependable estimates of revenue, costs and progress toward completion
To use the percentage of completion method, a contractor must be able to provide:
Cost to Cost method, Efforts expended method, Units of work performed method
Accepted Methods of measuring the extent of progress toward completion for percentage of completion
Completed contract Method
Accepted method of income recognition GAAP
Normally, the completed contract method is only used when_______________ associated with the contract preclude the contractor's ability to reasonably estimate contract revenues, costs or gross profit.