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The access of cash received in 2002 over un recovered

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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 the contract Cost incurred to date = percent complete Most recent estimate of total cost e-mail:[email protected]
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