Rochester Corporation was contracted to build a new warehouse for Focus International over the next 3 years. Rochester uses the percentage-of-completion method to recognize revenue. Rochester began work on the contract in 2020 and was on budget at the end of the year. As such, in accordance with its accounting policies, it recognized an estimated amount of profit on its 2020 Income Statement.

Beginning in 2021, Rochester began to encounter some unexpected expenses. A wildfire spread throughout the western part of the U.S., destroying a large amount of forest and driving up lumber prices. Additionally, Rochester encountered a number of delays that put construction significantly behind schedule. By the end of 2021, Rochester estimates that its costs will exceed revenues for this contract, resulting in a loss.

What guidance is provided in the Codification (include the appropriate reference with your answer) to assist Rochester in determining the timing and amount of when to recognize this loss?

Codification: https://asc.fasb.org/imageRoot/32/79982032.pdf