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Generally Accepted Accounting Principles
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| U.S. GAAP Codification | Accounting Topics |
| Principles of Accounting, U.S. GAAP Financial Reporting Guide |
| Accounting by Topic, Accounting Terms Dictionary |
| Accounting Research Bulletin (ARB) No. 45 |
| Accounting Research Bulletin (ARB) Opinion No. 45 a. Long-Term Construction-Type Contracts b. Issued in October 1955 ARB No. 45 does not cover CPFF contracts. --> Cost-Plus-Fixed-Fee (CPFF) contracts are covered by ARB No. 43 (Chapter 11A). Generally Accepted Methods a. Percentage-of-Completion Method b. Completed Contract Method Percentage-of-Completion Method Income is recognized as --> percentage of estimated total income. Percentage of completion --> costs incurred to date / estimated total costs Costs and recognized income not yet billed --> current assets Billings in excess of costs and recognized income --> current liabilities If total contract is estimated to be a loss, --> provision should be made for the loss on the entire contract. Completed-Contract Method Income is recognized --> only when the contract is (substantially) completed. Recording of income prior to completion --> is not permitted. If total contract is estimated to be a loss, --> provision should be made for expected losses. Selection of Method Estimates are needed for the followings: a. Costs to complete b. Extent of progress toward completion If the above estimates are reasonably dependable, --> percentage-of-completion method is preferable. If the above estimates are not dependable, --> completed-contract method is preferable. |
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