Terry, Inc., makes gasoline storage tanks. All production is done under contract. The company makes three basic models, but each model must be adapted to customer specifications for the location of outlets, insulation, and paint. It takes from three to six months to complete a tank. How should Terry account for the income for the business?

Question

Monserrat Vasquez

Business

14 February, 11:07

Terry, Inc., makes gasoline storage tanks. All production is done under contract. The company makes three basic models, but each model must be adapted to customer specifications for the location of outlets, insulation, and paint. It takes from three to six months to complete a tank. How should Terry account for the income for the business?

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Answers (2)

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Jared · Answer 1

Terry, Inc. Should apply the method percentage of completion or the accrual method. If Terry wants to use the accrual method and would like to avoid the percentage of completion method, the focus of his argument should be that the products are not "unique". Also, Terry would argue that the modifications for individuals costumers are irrelevant and does not add much or little significance to the cost of production.

Chase Johns · Answer 2

Answer: Terry, Inc. could have the percentage of completion or the accrual method apply. If Terry would like to avoid the percentage of completion method and instead use the accrual method, it should argue that the products are not "unique." Terry would argue that the modifications for individual customers are minor and add very little to the costs of production