When the cost basis is used to calculate the percentage of completion,cost items that may need adjustment include:
A) discounts for the bulk purchase of construction materials.
B) gains and losses on foreign currency translation.
C) materials delivered and paid for, but not yet used.
D) interest charges on late payments for materials and other items used in the construction project.

Question

Quizplus · Accepted Answer

The percentage of completion calculation requires a comparison of the actual cost to date to the total estimated cost of the project. Therefore, if materials have been paid for but not yet used, their cost needs to be adjusted to accurately reflect the actual cost to date. This adjustment would increase the cost basis and affect the percentage of completion calculation. The other options listed do not impact the cost basis for the project and therefore would not affect the percentage of completion calculation.

When the Cost Basis Is Used to Calculate the Percentage