CFA Practice Question

There are 534 practice questions for this study session.

CFA Practice Question

Estimated losses on long-term construction contracts are recognized immediately under the percentage-of-completion method. True or False?
Correct Answer: True

Although profits are recognized proportionately under the percentage-of-completion method, estimated losses on a contract are recorded in the period in which the loss is projected. This is an application of conservatism.

User Contributed Comments 3

User Comment
ColonelCFA Dang, thought this was a trick question and it would be false because this is true with both methods.
ldfrench Why don't you go back to making chicken, Colonel Sanders
schweitzdm The percentage-of-completion method recognizes profit corresponding to the percentage of cost incurred to total estimated costs associated
You need to log in first to add your comment.