Quizno Contracting would like to utilize the percentage of completion method to recognize a building under construction for Balto Veterinary.However,the accountant is not sure whether Quizno Contracting is meeting GAAP expectations.It is appropriate for Quizno Contracting to apply the percentage of completion method EXCEPT when

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Quizplus · Accepted Answer

According to GAAP, the percentage of completion method is appropriate when progress measures are dependable, contract obligations are precise and clear, both buyer and seller are expected to meet their obligations, and there is little or no uncertainty regarding payment by the buyer. However, if the buyer has agreed to use the completed contract method of revenue recognition, Quizno Contracting cannot use the percentage of completion method.

Quizno Contracting Would Like to Utilize the Percentage of Completion