Asked by Megan Chung on May 10, 2024
Verified
The amount of revenue recognized under the percentage-of-completion method is equal to the progress payments received during the reporting period.
Percentage-Of-Completion Method
An accounting technique used in long-term contracts, recognizing revenue and expenses based on the project's estimated completion level.
Revenue
The total income generated from normal business operations and before any costs or expenses are deducted.
Progress Payments
Payments made on a contract in advance of the final delivery, typically based on the completion of certain stages or milestones within the project.
- Comprehend the foundational concepts and uses of the percentage-of-completion method and completed contract method in recognizing revenue.
Verified Answer
DS
Daniel StubyMay 11, 2024
Final Answer :
False
Explanation :
The amount of revenue recognized under the percentage-of-completion method is based on the degree of completion of the project, not just progress payments received. Progress payments may be used to calculate the degree of completion but are not the sole factor in revenue recognition.
Learning Objectives
- Comprehend the foundational concepts and uses of the percentage-of-completion method and completed contract method in recognizing revenue.