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the amount of revenue that is recognized each period for a long-term contract that qualifies for revenue recognition over time is determined based on

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With the percentage-of-completion method, revenue on a lengthy project is recognized as work is completed. Each accounting period, revenues, costs, and gross profit are recognized based on an estimate of the project's completion percentage.

What various forms of revenue recognition are there?

  • Common Methods of Revenue Recognition
  • sales-based approach. You can recognize income using the sales-basis technique as soon as a sale is made. ...
  • Installment technique. Completed-Contract method.
  • the cost-recoverability approach.
  • technique of completion percentage.

Using a percentage of completion Long-term contract revenues and costs are calculated as a proportion of the work accomplished throughout the time (common with constructions and engineering where projects take years)

With the percentage-of-completion method, revenue on a lengthy project is recognized as work is completed. Each accounting period, revenues, costs, and gross profit are recognized based on an estimate of the project's completion percentage.

To learn more about gross profit refer to:

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