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11/24/21, 4:50 PM FINAL GRADING EXAMINATION
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FINAL GRADING EXAMINATION
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17. At contract inception, PFRS 15 requires an entity to determine how the
performance obligations identified in the contract will be satisfied.
According to PFRS 15, how does an entity satisfy a performance obligation
in a long-term construction contract?

11/24/21, 4:50 PM FINAL GRADING EXAMINATION
1 punto
Long-term construction contracts are unique from other contracts with customers.
Therefore, PFRS 15 excludes from its scope the accounting for long-term construction
contracts.
Long-term construction contracts are unique from other contracts with customers.
Therefore, PFRS 15 requires an entity to recognize revenue from long-term
construction contracts using either the percentage of completion method or the zero-
profit method.
PFRS 15 does not provide a special distinction between long-term construction
contracts from other types of contracts with customers. Therefore, an entity shall
apply the same principles in accounting for long-term construction contracts as those
applied to other types of contracts with customers.
PFRS 15 does not exclude long-term construction contracts from its scope. However,
because of the unique nature of long-term construction contracts, PFRS 15 requires
an entity to recognize revenue from a long-term construction contract that is expected
to be completed within 3 years or more using the percentage of completion method.
For those that are expected to be completed within a shorter period, revenue shall be
recognized when construction is complete.
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