Because the specifications had not been agreed on and contract had not been entered into, both contract revenue and costs were unable to be estimated. However, application of the percentage-of-completion method as well as recognizing of the sales had begun without meeting the application requirements of the percentage-of-completion method. As another case, contract revenue and contract costs can be estimated when entering into a contract with a customer. However, due to the expected generation of construction losses, application of the percentage-of-completion method did not begin.