When is an estimated loss on a long-term contract recognized, both for contracts that recognize revenue over time and those that recognize revenue at the point in time the contract is completed?
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A:
When is an estimated loss on a long-term contract recognized, both for contracts that recognize revenue over time and those that recognize revenue at the point in time the contract is completed?
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- What are the two types of losses that can become evidentin accounting for long-term contracts? What is the natureof each type of loss? How is each type accounted for?Explain how to account for revenue on a long-term contract over time as opposed to at a point in time. Under what circumstances should revenue be recognized at the point in time a contract is completed?Identify the proper accounting for losses on long-term contracts.
- Which of the following statements regarding the recognition of expenses related to long-term contracts under IFRS is true? A: General and administrative expenses are normally recognized as an asset. B: The cost of wasted resources of an abnormally high amount are recognized as an asset until the performance obligation has been met. C: If capitalized costs are no longer expected to be recovered through the contract, a portion of contract revenue should be reversed. D: Costs that will be reimbursed by the customer are recognized as an asset.When it is probable that total contract costs will exceed total contract revenue, how shall the long-term contractor account for the difference? The expected loss shall be recognized as an expense taking into account the percentage of completion as of the end of the period. The expected profit shall be recognized as a profit immediately. The expected loss shall be recognized as a profit taking into account the percentage of completion as of the end of the period. The expected loss shall be recognized as an expense immediatelyIf the outcome of a long-term contract can be measured reliably, the preferred accounting method under both IFRS and US GAAP is: A . the cost recovery method.
- How do companies account for long-term contracts that qualify for revenue recognition over time?Which statement is true when the outcome of construction contract cannot be estimated reliably? a. Contract costs shall be recognized as an expense in the period when incurred. b. Revenue shall be recognized only to the extent of contract costs incurred that is probable will be recoverable c. All of these statements are true. d. An expected loss on the construction contract shall be recognized as an expense immediately._____ is a contract that involves compensation for specific potential future losses in exchange for periodic payments and that provides for the transfer of the risk of a loss, from one entity to another, in exchange for a premium. a.Spot contract b.Insurance c.Hedging d. Forward contract
- If an entity recognises the revenue associated with a contract with a customer over time (rather than at a point in time), would this approach be considered more conservative than an approach that defers profit recognition until the completion of the contract (that is, at a future point in time)?Demonstrate revenue recognition for long-term contracts, both at a point intime when the contract is completed and over a period of time according to thepercentage completed.Under PFRS 15, what is the measurement basis of revenue from contracts with customers? Select the correct letter: A. Revocable amount of the consideration received or receivable B. Book value of the consideration received or receivable C. Fair value of the consideration received or receivable D. Historical cost of the consideration received or receivable