An airplane manufacturing company routinely builds fighter jets for the U.S.armed forces.It takes fourteen months to build one jet,and the government pays for them in installments over the fourteen-month period.Which revenue recognition method should be used?

 

　　A.Installment sales method.

 

　　B.Percentage-of-completion method.

 

　　C.Completed contract method.

 

　　Answer=B

 

　　The cost recovery method is used when future cash collections are not assured even after receipt of partial payments.Gross profit is not recognized until all of the cost of goods sold is collected.The percentage-of-completion method is used when ultimate payment is assured and revenue is earned as costs are incurred.Profit is recognized corresponding to the percentage of costs incurred to the total estimated.

 

　　解析：

 

　　这题的知识点是长期合同。

 

　　先判断这题是属于建造类的合同（造飞机）。所以，如果是收入确定的话，那么用POC法，如果收入不确定的话，就用Completed Contract法。在本题，收入是14个月确定到账，所以是POC法。