Problem 1: When a contractor determines that a contract will result in an overall loss, when should that loss be recognized within the completed-contract and percentage-of-completion methods?
Completed-Contract Percentage-of-Completion
a. Immediately Over the remainder of the contract
b. At the completion of the contract At the completion of the contract
c. At the completion of the contract Immediately
d. Immediately Immediately
Problem 2: Under which of the following circumstances is the installment sales method appropriate for the recognition of revenue in the income statement?
a. For any sales where collection is spread over a reasonable long period of time.
b. In any situation where management wishes to delay the recognition of revenue in order to smooth its income.
c. For sales where collection is spread over a reasonable long period of time and significant doubt exists about the ultimate collection of the receivables.
d. For sales where collection is spread over a reasonable long period of time and no significant doubt exists concerning ultimate collection of the receivables.