Real World Question A recent annual report of the RPM International Inc. stated:

Certain long-term construction contracts are accounted for under the percentage-of-completion method, and therefore we record contract revenues and related costs as our contracts progress... When reasonable dependable estimates cannot be made (of progress toward completion), or if other factors make estimates doubtful, the completed contract method is applied.

Under the completed contract method, billings and costs are accumulated on the balance sheet as the contract progresses, but no revenue is recognized until the contract is complete or substantially complete.

How does the company’s accounting policy comply with the realization principle?