Explain about percentage of completion method, Accounting Basics

Assignment Help:

Q. Explain about Percentage of completion method?

The percentage-of-completion method makes out revenue based on the estimated stage of completion of a long-term project. To calculate the stage of completion firms compare actual costs incurred in a period with the total estimated costs to be incurred on the project. To exemplify assume that a company has a contract to build a dam for USD 44 million. The approximate construction cost is USD 40 million. You compute the estimated gross margin as follows

715_Explain about Percentage of completion method.png

The firm distinguish the USD 4 million gross margins in the financial statements by recording the assigned revenue for the year and then deducting actual costs incurred that year. The formula to recognize revenue is as

(Real construction costs incurred during the period / Total estimated construction costs for the entire project for period) * Total sales price=Revenue recognized


Related Discussions:- Explain about percentage of completion method

Note: i need help with these 10 questions, The Bayside Company uses the LIF...

The Bayside Company uses the LIFO cost flow method to value inventory. In the current year, profit at Bayside is running unusually high. The corporate tax rate is also high this ye

Trading and profit and loss account, state why carriage inwards is stated o...

state why carriage inwards is stated on the trading account

Setting Accounting Standards, Mission statement for PCAOB and AICPA and how...

Mission statement for PCAOB and AICPA and how it contributed to GAAP 2-3 pages APA style

Tips to keep in mind while making financial statements, Tips to be keep in ...

Tips to be keep in mind while preparing the Financial Statements : 1. Objects given in the trial balance must be revealed only once as it is assumed that they are already adjust

Abc''s product information current product, ABC's Product information Cu...

ABC's Product information Current Product Expansion Product (estimate) Selling Price $14.50 $ Units produced and expected to be sold 80,000 5,000 Machine Hours 40,000 5,00

Aging Approach., At the end of 2011 Samuda reported a balance in Account re...

At the end of 2011 Samuda reported a balance in Account receivable of $620,000 and estimated that $12,400 of this account would likely be uncollectible. The allowance for doubtful

What is payroll record keeping, What is Payroll record keeping Employe...

What is Payroll record keeping Employer should maintain payroll records which will supply the name, social security number, address, gross earnings for every payroll, period o

Show adjustments for deferred items, Q. Show Adjustments for deferred items...

Q. Show Adjustments for deferred items? This segment discusses the two types of adjustments for deferred items asset/expense adjustments and liability/revenue adjustments. In t

The hardware from another defective device , Assume we are a trading compan...

Assume we are a trading company giving devices and sometimes after sales service. when any fault came we just replace the hardware from another defective device and getting the pay

Miss, what is the implications of applying accounting concepts wrongly

what is the implications of applying accounting concepts wrongly

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd