Long-term Construction Accounting
Revenue recognition before delivery
- Government development contracts.
- Other long-term contracts.
- Two methods of accounting permitted (long-term construction):
- Percentage-of-Completion Used when contract specifies partiesí rights, consideration and settlement terms; buyer and seller are expected to perform.
- Completed Contract Used when a firmís business is primarily short-term, uncertainty exists about material aspects of the contract such as the ability to perform.