Losses on unprofitable long-term construction projects
A) are generally deferred until the contract is complete.
B) are only recognized immediately under the completed-contract method.
C) are only recognized immediately under the percentage-of-completion method.
D) are recognized immediately under both the completed-contract method and the percentage-of-completion method.

Question

Quizplus · Accepted Answer

Losses on unprofitable long-term construction projects are recognized immediately under both the completed-contract method and the percentage-of-completion method, as it is important to reflect the economic reality of a loss as soon as it is foreseeable, regardless of the accounting method used.

Losses on Unprofitable Long-Term Construction Projects