A construction company should recognize an expected loss on a project during the current period when it becomes apparent that the estimated total costs of the project will exceed the total revenue expected to be generated from that project. This aligns with the accounting principle of recognizing losses as soon as they are foreseeable, rather than waiting until the completion of the project.
By recognizing the loss in the current period, the company provides an accurate depiction of its financial position, ensuring that its financial statements reflect both the potential revenue and the anticipated costs. This early recognition also aligns with the concept of conservatism in accounting, which dictates that potential losses should be recognized while gains should only be recorded when realized.
Waiting until the completion of the project or estimating expenses in a subsequent period would not provide stakeholders with a timely or accurate representation of the project's financial implications. Applying a different accounting method would not change the fundamental requirement to recognize foreseeable losses within the current reporting period. Therefore, recognizing the expected loss within the current period is the appropriate approach according to accounting standards.