Provide responses to the following. (a) Compare the volatility of reported earnings over the life of a
Question:
(a) Compare the volatility of reported earnings over the life of a contract of both the completed-contract and percentage-of-completion accounting methods. (Assume that under percentage-of-completion, the income is earned evenly.)
(b) Discuss the difference in volatility when a company has many contracts.
(CFA adapted)
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a Consider a single contract with gross profit of 1200000 with a 4year life Under percentage of comp...View the full answer
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Related Book For 
Intermediate Accounting principles and analysis
ISBN: 978-0471737933
2nd Edition
Authors: Terry d. Warfield, jerry j. weygandt, Donald e. kieso
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