Why use Percentage Of Completion?
Companies that deliver contracts that take several months or longer to complete need to use Percentage Of Completion for Revenue Recognition and Inventory Valuation. This approach will ensure that you can plan for profits, control those plans, and measure the results. Percentage Of Completion provides the best measure of operating results in terms of revenues, costs, expenses, and profits. Bankers will often require statements based on Percentage of Completion Financial Statements, supported by Completed and In-Progress Job Schedules. Strong Estimating abilities are also critical. What is current GAAP for project based companies? Under GAAP, there are two methods of accounting for income on long-term contracts: • The Completed Contract Method” • The Percent of Completion method In the Percent of Completion method, revenues, expenses, and gross profit are recorded each accounting period as described above. When the estimates of costs to complete and the percent complete are considered d
