percentage-of-completion method

I don’t understand why percentage-of-completion method ends up having higher total asset and lower liabilities compared with completed contract method? Doesn’t it imply that only the completed part gets recognized and reflected as asset at balance sheet??

in the long run, everything is recognized. what’s the question?

I’m asking about revenue recognition – not in the end, but any point during the contract.

The accrual of gross profit on POC contracts while they are in progress feeds into total assets being higher.

i dont know about the lower liability part, but in my understanding, %of completion recognizes revenue earlier, so in the earlier periods===>higher net income ===> higher equity ====> higher total asset

Costs have to be recorded in the same period as revenues, so I don’t understand how liabilities can be lower either. Doesn’t this violate the matching principle?