Question

Do you agree that if the difference between the Construction in Process and the Billings on Construction in Process account balances is a debit, the difference is reported as a current asset, why and why not?

Answer 1

The balances of progress billings and construction in process should be shown at net, as a current asset if a debit balance, and as a current liability if a credit balance.

Under the completed contract method, the Construction in Process account balance consists of construction costs only.

The principal advantage of the completed-contract method is that reported revenue reflects final results rather than estimates.

Further, the amount of construction in progress which has not yet been collected ( unbilled) will be recovered later and hence should be classified as an asset.