Revenue from service contracts is recognized by:
2019
Revenue from service contracts is recognized by:
- A.
With reference to the stage of completion
- B.
On receipt of payment
- C.
Only when the contract is fully completed
- D.
On the basis of time proportion
Attempted by 22 students.
Show answer & explanation
Correct answer: A
Revenue from service contracts is recognized based on the stage of completion of the service at the reporting date. (Percentage of Completion Method) . This reflects work performed and revenue earned up to that point, even if payment has not been fully received. Common ways to measure progress: cost-to-cost (costs incurred ÷ total estimated costs), efforts expended (hours or labour), or output measures such as surveys or milestones.