What is the major advantage of the percentage-of-completion method compared with the cost- recovery method of revenue recognition?

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Quizplus · Accepted Answer

The major advantage of the percentage-of-completion method compared with the cost-recovery method of revenue recognition is that percentage-of-completion gives a more realistic indication of a firm's economic activity. This method recognizes revenue and expenses in proportion to the work completed on a project, providing a better reflection of the actual progress and profitability of a project over time. The cost-recovery method, on the other hand, recognizes revenue only after all project costs have been recovered, which may not accurately reflect the economic activity of the project.

What Is the Major Advantage of the Percentage-Of-Completion Method Compared