In the completed contracts method of accounting, a contract is considered complete when it reaches what percentage or more?

In the completed contracts method of accounting, a contract is regarded as complete when it reaches a level of completion that signifies the project's finalization and all contractual obligations have been fulfilled. This is commonly understood to be at 100% completion. When utilizing this method, revenue and expenses related to the contract are only recognized when the project is fully finished, ensuring that financial reporting reflects the true status of the contract.

Thus, recognizing a contract at 98% completion does not align with the principles of this accounting method, as it does not meet the threshold that validates completion. The approach emphasizes the importance of waiting until all work is done, maintaining a conservative perspective on revenue recognition. This ensures clarity and accuracy in financial statements and protects stakeholders by not prematurely recognizing income or expenses.