Percentage-of-Completion
Accounting for Long-Term Construction Contracts Percentage- of-Completion Method
We will emphasize the ratio of cost method
Basic formulas: (3)
(1) costs incurred to end of the period = % complete to date
total estimated costs to finish
(2) % complete to date times the total estimated gross profit (or revenue) equals the total gross profit (or revenue) to date.
(3) Total gross profit (or revenue) to date less gross profit (or revenue) already recognized equals the gross profit (or revenue) recognized during the current period.