Which method of revenue recognition do IFRS require for construction contracts when the percentage-of-completion method cannot be applied?
A)completed contract
B)installment sales
C)completed contract.
D)cost recovery

Question

Quizplus · Accepted Answer

When the percentage-of-completion method cannot be applied to construction contracts, IFRS requires the use of the cost recovery method. Under this method, no revenue is recognized until the costs of the contract are fully recovered. Once the costs are recovered, revenue can then be recognized up to the amount of contract revenue that is expected to be collected. Therefore, the best choice is D – cost recovery.

Which Method of Revenue Recognition Do IFRS Require for Construction