9.3 Long-Term Contract Profit Recognition. Three alternative revenue recognition

methods are available to long-term contractors when cash inflows are probable: percentage

of completion, completed contract, and cost recovery. Assuming that the contract price is known,

discuss the appropriate method under U.S. GAAP and IFRS under two alternative scenarios: (a) the

proportion of work performed and the proportion of work remaining until completion can be reliably

determined and (b) no reliable basis exists for determining the total amount of work necessary

to complete the project. (Note: Because the percentage of completion is generally estimated by

comparing the costs to date to expected total costs, the inability to estimate the total amount of

work to be performed creates the inability to estimate percent complete reliably.)