Boston Consulting Group (BCG) is a management consulting, technology services and outsourcing organization. Which of the following actions should managers take when there is evidence that a fixed-rate contract is over budget and will generate a loss for the firm?

a. Use the percentage of completion method and pro rate the loss over the entire term of the engagement.

b. Restate the financial statements and recognize the loss in the earliest period of the engagement.

c. Use the percentage of completion method to recognize the loss over the remaining term of the engagement.

d. Recognize the loss in the current period rather than over the remaining term of the engagement.

e. None of the above.

Answer rating: 100% (QA)

Solution Recognise the loss in the current period rather than over th... View the full answer