unearned revenue

CFA Level I
#1

a 3-year project price 2500, cost 2000. use completed contract method of revenue recognition. year--------------1--------2---------3-------total billed-----------1000------1000------500-----2500 cash received-700-------1200-----600------2500 cost-------------700-------900------400-----2000 how much total unearned revenue should be recorded at end of year2? a. 2000 b.1900 schweser answer is billed total amount 2000. I think it is cash received total amount 1900

#2

edit: oops, yeah 2000 accrual accounting - payment is reasonably assured

#3

I think it would be “earned” revenue since you have already technically earned it, but you still won’t recognize any of it anyway until you have completed the contract.

#4

They billed, they received some cash. They record unearned revenue in the amount billed, not in the amount received. Unearned revenue liability is credited, probably inventory - undergoing construction is debited.