Cost estimates at the end of the second year indicate a loss will result on completion of the entire contract.Which of the following statements is correct?
A)Under the completed-contract method, the loss is not recognized until the year the
Construction is completed.
B)Under the percentage-of-completion method, the gross profit recognized in the first year
Must not be changed.
C)Under the completed-contract method, when the billings exceed the accumulated costs,
The amount of the estimated loss is reported as a current liability.
D)Under the completed-contract method, when the Construction in Process balance
Exceeds the billings, the estimated loss is added to the accumulated costs.

Question

Quizplus · Accepted Answer

Under the completed-contract method, when billings exceed accumulated costs, the estimated loss is recognized as a current liability to reflect the anticipated loss on the contract.

Cost Estimates at the End of the Second Year Indicate