If a company had an agreement to deliver software that requires significant production, modification, or customization, which method of revenue recognition should it use?
A)percentage-of-completion method
B)deposit method
C)installment method
D)cost recovery method

Question

Quizplus · Accepted Answer

The percentage-of-completion method is appropriate when delivering software that requires significant production, modification, or customization because it allows revenue to be recognized as progress is made towards completion of the project. This method requires the company to estimate the percentage of completion and recognize that percentage of the contract revenue as earned each period.

If a Company Had an Agreement to Deliver Software That