General Note: In the area of accounting for long-term construction contracts, the substantive guidance under ASC 606 (the new standard) remains unchanged from ASC 605 (the existing standard). However, the requirements specifically ask students to research and reference the new accounting standard. As such, wherever applicable, we have referenced the new revenue recognition standard.
Are Toshiba's accounting policies for long-term construction contracts—as described in the accounting policies section of the case—consistent with U.S. GAAP? Cite authoritative pronouncements in support of your answer. Your response should focus on Toshiba's choice of accounting policies rather than its implementation of those policies.
Toshiba used the completed-contract method (a) for smaller contracts and (b) for contracts that are expected to be completed within a period of one year or less. For smaller contracts (less than ¥I billion for the Power Systems Company, and less than ¥500 million for the Community Solutions Company), use...
