Inventory is reported at cost plus gross profit recognized to date under which of the following revenue recognition methods?
A)completed contract
B)installment method
C)cost recovery
D)percentage of completion

Question

Quizplus · Accepted Answer

Under the percentage of completion revenue recognition method, inventory is reported at cost plus the gross profit recognized to date. This method recognizes revenue based on the percentage of completion of a project, and the amount of revenue recognized corresponds to the percentage of the total project completed. As the project progresses, the recognized gross profit is added to the inventory value, resulting in an inventory cost that includes both cost and profit to date.

Inventory Is Reported at Cost Plus Gross Profit Recognized to Date