What is a key aspect of the completed contract method?

The completed contract method is characterized by the deferral of income recognition until the entire project is completed. This means that revenues and associated expenses are only recorded once the project reaches completion, providing a clear picture of the profit or loss associated with that specific contract. This approach is often favored in certain industries, such as construction, where projects can take a substantial amount of time to finish, and it allows for a straightforward accounting treatment without the need for ongoing estimates of revenues or costs during the project's duration. By waiting until completion to recognize income, this method helps prevent artificial inflation of profits during the early stages of a project and ensures that financial statements reflect actual performance only after the contract is fully realized.