When a firm's construction activities meet the criteria for revenue recognition as construction progresses, the firm usually recognizes revenue during the construction period using the

Question

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The percentage-of-completion method is used to recognize revenue over the construction period when a firm's activities meet the criteria for revenue recognition as construction progresses. This method recognizes revenue based on the percentage of work completed as compared to the total expected costs of the project. The completed contract method is not appropriate as it recognizes revenue only when a construction project is fully completed. The cost recovery methods (both first and last) are not suitable for recognizing revenue during the construction period as they focus on recovering costs rather than recognizing revenue. The installment method is used for recognizing revenue for long-term sales, not construction activities.

When a Firm's Construction Activities Meet the Criteria for Revenue