Assume the percentage-of-completion method of revenue recognition is used on a long-term construction contract.Under this method,revenues that are earned but unbilled at the balance sheet date should be disclosed
A) as a long-term receivable in the noncurrent assets section of the balance sheet.
B) only as a footnote disclosure until the customer is billed for the percentage of work completed.
C) as construction in progress in the current assets section of the balance sheet.
D) as construction in progress in the noncurrent assets section of the balance sheet.

Question

Quizplus · Accepted Answer

Under the percentage-of-completion method, revenues that are earned but unbilled at the balance sheet date are disclosed as construction in progress in the current assets section of the balance sheet. This reflects the ongoing nature of the work and the expectation that the amounts will be billed and likely collected within the next operating cycle.

Assume the Percentage-Of-Completion Method of Revenue Recognition Is Used on a Long-Term