What is Percentage Of Completion?
Percentage of Completion is based on ratio of the accumulated job cost relative to total estimated cost. This cost-to-cost ratio determines revenues earned to date, which when charged for costs, yields job profit for the period. The Work in Process or WIP Schedule lists individual job billings, revenue recognized to date, estimated cost to complete, actual costs, percent complete and profits. Percentage of Completion Accounting benefits project based companies by recognizing equity and earned revenues on jobs in progress. This equity is recognized in the current asset account Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts. A company’s working capital is decreased by the current liability account Billings in Excess of Costs and Estimated Earnings on Uncompleted Contracts.
