#cfa-level-1 #reading-25-understanding-income-statement #revenue-recognition
Under the
completed contract method, the company does not report any income until the contract is substantially finished (the remaining costs and potential risks are insignificant in amount), although provision should be made for expected losses.
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3.2.1. Long-Term Contractsd incurred. Under this method, no profit is recognized until all the costs had been recovered. Under US GAAP, but not under IFRS, a revenue recognition method used when the outcome cannot be measured reliably is the completed contract method. <span>Under the completed contract method, the company does not report any income until the contract is substantially finished (the remaining costs and potential risks are insignificant in amount), although provision should be made for expected losses. Billings and costs are accumulated on the balance sheet rather than flowing through the income statement. Under US GAAP, the completed contract method is also acceptable when the entity Summary
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