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Unformatted text preview: received in 2002 over un
recovered cost . long term construction contracts :
Completed contract method:
It differ all contracts costs until the project is completed and then matches the cost of completing the contract with the revenues from
the project .hence: profit is recognized only in the year of completion
All costs are deferred in a construction in progress account until the project is completed and revenue is recognized then construction in
progress is closed to cost of sales. Percentage of completion method:
Revenues and gross profit are recognized each period based upon the progress of the construction
Construction cost plus gross profit earned to date are accumulated in an inventory account ( construction in proceeds ) & progress
billings are accumulated in a contra inventory account ( billings on construction in process ).
The percentage of completion is measured by comparing cost incurred to date with the most recent estimate of the total cost to complete
Cost incurred to date
= percent complete
Most recent estimate of total cost e-mail:.acchouse_scada@yah...
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This document was uploaded on 02/09/2014.
- Winter '13