Detailed Answer
Answer (C) is correct. When the outcome of a transaction involving the rendering of services (e.g., a construction project) cannot be estimated reliably, revenue must be recognized only to the extent of the expenses recognized that are recoverable. If it is probable that the entity will recover the transaction costs incurred, revenue is recognized only to the extent of those costs that are expected to be recoverable. Thus, $100,000, 10% of the $1,000,000 contract, should be recognized as revenue compared with $0 of revenue recognized under the completed contract method, since the contract is not fully completed.