The completed-contract method of accounting for long-term construction-type contracts is preferable when
A) a contractor is involved in numerous projects.
B) the contracts are of a relatively long duration.
C) estimates of costs to complete and extent of progress toward completion are reasonably dependable.
D) there are inherent uncertainties in the contract beyond normal business risks.

Question

Quizplus · Accepted Answer

The completed-contract method is preferable when there are inherent uncertainties in the contract beyond normal business risks, as it defers all revenue and expense recognition until the contract is completed, thus avoiding the potential for significant adjustments due to uncertainties.

The Completed-Contract Method of Accounting for Long-Term Construction-Type Contracts Is