Under GAAP, when a company uses the completed-contract method of accounting, ________.
A) estimated losses are recognized in full prior to completion of the contract
B) estimated losses are recognized ratably based upon the degree of contract completion
C) neither profits nor losses are recognized until the contract is completed
D) expenses are recorded each period, but revenue is not recognized until the contract is completed

Question

Quizplus · Accepted Answer

Estimated losses are recognized in full as soon as they are identified, even if the contract is not yet completed, under the completed-contract method.

Under GAAP, When a Company Uses the Completed-Contract Method of Accounting