What method for revenue recognition is commonly used for long-term projects?

The percentage of completion method is commonly used for revenue recognition in long-term projects because it allows for revenue to be recognized progressively as the project progresses. This method is particularly valuable in industries such as construction or large-scale manufacturing, where projects can span multiple accounting periods.

By assessing the degree of completion of a project at various stages and recognizing revenue accordingly, companies can provide stakeholders with a more accurate picture of the ongoing financial performance and potential profitability of their projects. This method is based on the proportion of costs incurred to date relative to the total estimated costs for the entire project, making it a dynamic approach that matches revenue recognition with when value is created.

Using this method also aligns with the principles of accrual accounting, ensuring that revenue is recorded in the periods in which the work is performed, rather than waiting until the completion of a project. This helps in providing clearer insights into a company's financial health and performance over time.