When accounting for revenue over time for a long-term contract, the percentage of completion used to recognize revenue in the first year usually is determined by measuring:

Multiple Choice

• Costs incurred in the first year, divided by estimated remaining costs to complete the project.

• Costs incurred in the first year, divided by estimated total costs for the completed project.

• Costs incurred in the first year, divided by estimated gross profit.

• Costs incurred in the first year, divided by estimated total costs to be incurred in the remaining years of the project.