Question: Cypress Company enters into a fixed-fee contract to provide architectural services to the Gervais Group for $240,000. The Gervais Group, which will make monthly payments of $40,000, is a new client for Cypress Company. Cypress has agreed to provide Gervais with plans and drawings for a new manufacturing facility that will qualify for a LEED (Leadership in Energy and Environmental Design) green building certification. Cypress has no experience in designing green buildings, but it has guaranteed Gervais that the plans and drawings will be completed in six months.
Required: Evaluate whether it would be appropriate for Cypress Company to account for its contract with Gervais Group on a stage-of-completion basis.