In this lesson, Nick Palazzolo, CPA, dives into the nuances of recognizing revenue prior to the completion of a contract, especially within the realm of long-term construction projects. He breaks down the rationale behind the percentage of completion and the completed contract methods, infusing the instruction with relatable examples to illustrate how external factors, such as inflation and unforeseen project delays, can impact revenue recognition. With a conversational tone, Nick details the conditions under which each method may be applied, highlighting the importance of contract terms, certainty of performance, and the ability to reliably estimate project completion in determining the appropriate revenue recognition approach.
Lesson: Revenue Recognition Before Delivery
In this lesson, Nick Palazzolo, CPA, dives into the nuances of recognizing revenue prior to the completion of a contract, especially within the realm of long-term construction projects. He breaks down the rationale behind the percentage of completion and the completed contract methods, infusing the instruction with relatable examples to illustrate how external factors, such as inflation and unforeseen project delays, can impact revenue recognition. With a conversational tone, Nick details the conditions under which each method may be applied, highlighting the importance of contract terms, certainty of performance, and the ability to reliably estimate project completion in determining the appropriate revenue recognition approach.
Updated: Oct. 20, 2021 Create an account