You were recently hired by Boat Builders Construction (BBC) as the assistant controller in Chula Vista, CA. BBC has multiple locations. Your office is located at: 870 G Street, Chula Vista, CA 91910. BBC is in the business of building boats for the United States Coast Guard and yachts for private individuals. These watercrafts typically take 6-18 months to complete depending on specifications. The watercrafts that are manufactured are custom designed to meet specific requirements of either the Coast Guard or the individual. In most cases BBC would be required to incur significant costs to rework a boat prior to selling the boat to a customer other than the Coast Guard or the individual customer. As such, BBC's contracts all have a stipulation that if the customer cancels the contract, BBC will be entitled to reimbursement for costs incurred for work completed to date plus a reasonable margin

In this instance, is it better to recognize revenue upon completion or over time? What is the effect of both on the year-end financial statements?

Answer rating: 100% (QA)

In the scenario described for Boat Builders Construction BBC where the construction of watercrafts takes 618 months and the contracts have provisions ... View the full answer