When losses occur on long-term contracts using the completed-contract method,they are recognized

A) proportionately over the contract period using costs incurred as a base.
B) evenly over the contract period.
C) in their entirety as soon as it becomes known that a loss will be suffered.
D) at the completion of the project.

Under the completed-contract method, losses on long-term contracts are recognized in their entirety as soon as it becomes known that a loss will be suffered. This means that the losses are not recognized until the end of the contract or until it becomes evident that the project will result in a loss. This method defers recognition of revenue and expenses until the project is completed. In contrast, the percentage-of-completion method recognizes revenue, expenses, and profit or loss each period based on the percentage of the project completed during that period.