In late April, the Acme Construction Co. submitted a $1,200,000 progress billing on a construction contract. On May 2, the bill was approved for payment, subject to a ten percent retention, as provided by the contract. Construction expenditures should be debited when:

Question

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Construction expenditures should be recognized and debited when the progress billing is approved for payment by the owner, which corresponds to the completion of a certain percentage of the project work. The approval for payment indicates that the owner agrees to pay for the work completed up to that point. Therefore, choice A is the best option. Signing the contract (choice B) does not affect the recognition of construction expenditures. Similarly, payment of the bill (choice C) or the final ten percent retention (choice D) do not affect the original recognition of the construction expenditures.

In Late April, the Acme Construction Co