Interim accounting statements comprise a major part of financial reporting. There is ongoing discussion considering the relevance of reporting on business activities for interim periods.
a. Discuss how revenues are recognized for interim periods. Comment on differences in revenue recognition for companies (1) subject to large seasonal fluctuations in revenue, and (2) having long-term contracts accounted for using percentage of completion for annual periods.
b. Explain how product and period costs are recognized for interim periods.
c. Discuss how inventory and cost of goods sold can be given special accounting treatment for interim periods.
d. Describe how the provision for income taxes is computed and reported in interim reports.