Silica Corporation constructs highly specialized communication satellites. A customer in Hong Kong recently placed an order for a cable TV satellite at a price of $20 million. The order was placed in April 2018, and the satellite is to be delivered in one year. The customer has guaranteed to pay in full at the end of 2018, regardless of progress or cancellation. Silica uses "proportion of time" as its measure of progress toward completion.
Required:
When should Silica recognize revenue: at completion, or as the construction is performed?

Question

Quizplus · Accepted Answer

The Answer of Silica Corporation constructs highly specialized communication satellites. A customer in Hong Kong recently placed an order for a cable TV satellite at a price of $20 million. The order was placed in April 2018, and the satellite is to be delivered in one year. The customer has guaranteed to pay in full at the end of 2018, regardless of progress or cancellation. Silica uses "proportion of time" as its measure of progress toward completion.
Required:
When should Silica recognize revenue: at completion, or as the construction is performed?

Silica Corporation Constructs Highly Specialized Communication Satellites