In the case of a small home construction company that builds under long-term contracts, generally:
A)The percentage of completion method is required to report the income from the construction contracts.
B)The percentage of completion method can be elected and will defer income until the contract is completed.
C)The completed contract method can be used and will defer income.
D)The accrual method must be used because inventories are an income-producing factor.
E)None of these is true.

Question

Quizplus · Accepted Answer

The completed contract method allows income and expenses from the contract to be deferred until the project is completed, which is suitable for small construction companies under certain conditions, providing a way to manage tax liabilities based on the completion of long-term contracts.

In the Case of a Small Home Construction Company That