Use the attached Word file to complete this problem.
- What theoretical justification is there for Vitaly Scherbo Company's use of the percentage-of-completion method?
- How would progress billings be accounted for? Include in your discussion the classification of progress billings in Vitaly Scherbo Company financial statements.
- How would the income recognized in the second year of the 4-year contract be determined using the cost-to-cost-method of determining percentage depletion?
- What would be the effect on earnings per share in the second year of the 4-year contract of using the percentage-of-completion method instead of the completed-contract method? Discuss.