What method can be used to recognize revenue by measuring progress towards completion?

The appropriate method for recognizing revenue by measuring progress towards completion is the percentage of completion method. This approach is particularly relevant for long-term contracts or projects, such as construction, where revenue and expenses are recognized over time as the work progresses rather than being deferred until the completion of the entire project.

Using the percentage of completion method allows for a more accurate reflection of financial performance, as it aligns revenue recognition with the actual progress made on a project. This method typically involves estimating the total costs of the project and the costs incurred to date, allowing for determination of the percentage of completion. Revenue can then be recognized based on this percentage, which reflects the work performed.

The output and input methods, while they may serve to recognize revenue over time, are actually subsets of various methodologies that aim to determine progress. They tend to focus on either the physical output achieved (such as the completion of milestones) or the inputs used (like labor hours or materials consumed), but they do not inherently define a comprehensive approach like the percentage of completion method does.

This clarity in financial reporting enhances the financial statements' relevance to users, facilitating better decision-making.