When using the cost recovery method of accounting for long-term construction contracts under IFRS:
A) Estimated losses on the overall contract are recognized before the contract is completed.
B) Expenses are recorded each period, but revenue is only recognized when the contract is completed.
C) Companies can use the percentage-of-completion method if that is their preference.
D) Neither gains nor losses are recognized until the contract is completed.

Question

Quizplus · Accepted Answer

Under IFRS, estimated losses on the overall contract must be recognized immediately when they are expected, even if the contract is not yet completed.

When Using the Cost Recovery Method of Accounting for Long-Term