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Revenue Recognition

Two requirements:

1. Completion of earnings-process

2. Reasonable assurance of payment

Revenue recognition methods:
  • Percentage of completion method
     
  • Completed contract method
     
  • Installment sales
     
  • Cost recovery method
Question:
Contract to build a ship for $1,000 and a reliable estimate of the total cost is $800. Find Net Income using % of completion method?
Ans:





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