During a study session, one of your classmates states the following:
“If a company is unable to measure the degree of completion on a long-term contract, it must use the zero-profit method. With this method, the company would not report any revenues, expenses, or profits until the year in which the contract is completed so there would be no statement of income impacts as a result of the contract until then.”

Required
Evaluate your classmate’s statement. Identify the elements that are correct and incorrect.