I would say they don’t under accrual accounting because the company hasn’t earned them yet. Can someone confirm?
No they do not show up on the balance sheet as an asset for the contract or a liability for the “work to be done.” Your assumption about accrual accounting is correct.
The revenue/expense recognition is dealt with differently between IFRS and GAAP and differently based on if costs can be reasonably estimated or not (percentage completion method, completed contract method, etc.)
They show up on the balance sheet either as billings in excess of costs/ advanced billings (=a liability account that reflects over-billings) or costs in excess of billings/ construction in progress (=asset account that reflects under-billings with regards to work in progress).
The balance sheet treatment is however not touched in Level I (no idea about Level II though). Regards,