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

Accounting equation, what is accounting equation and introduction

what is accounting equation and introduction

Cash flow analysis, Cash  Flow Analysis:   As per the Institute of Cost...

Cash  Flow Analysis:   As per the Institute of Cost and Works Accountants of India (AICWAI), a Cash Flow Statement is a declaration setting out the flow of cash under different

Explain about stable dollar assumption, Q. Explain about stable dollar assu...

Q. Explain about stable dollar assumption? In the United States accountants make one more assumption regarding money measurement that the stable dollar assumption. Under the st

Non-current assets, What should companies not show as non-current assets in...

What should companies not show as non-current assets in their balance sheets? A  plant bought on hire purchase B  plant fully depreciated C  plant held on finance leases D  pla

Final accounts, stpes to be taken prepaing for final accounts

stpes to be taken prepaing for final accounts

Difference between finance and accounts?, Finance: It is the part of econo...

Finance: It is the part of economics that studies the management of money and other assets. In easier terms it can be explained as the commercial activity of providing funds and c

What is differences in access to financial information, What is differences...

What is differences in access to financial information Distinction between the two areas of accounting reflects, to some extent, differences in access to financial information.

Responsibility of leader and expert, Q. Responsibility of Leader and expert...

Q. Responsibility of Leader and expert? As a partner in the firm Tracy will have numerous broad responsibilities. She will engage in business development, high-level client ser

Illustrate the cases of financial accounting, Illustrate the cases of finan...

Illustrate the cases of financial accounting ?Enron, an energy-trading business which is based in Texas, and was accused of entering into complicated financial arrangements in

Example of accumulated depreciation account, Q. Example of Accumulated Depr...

Q. Example of Accumulated Depreciation account? Along with other items the trial balance of Korman Company for 2010 December 31 includes the following account balances

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