Completed Contract
Accounting for Long-Term Construction Contracts--Completed Contract Method
- Revenue is recognized when the contract is completed. No interim recognition of profit as work progresses.
- Has the effect of deferring revenue compared to the percent completion approach.
Illustration: For the years 1998 and 1999 as presented previously:
Calculations:
Year Gross Profit Recognized
1998 $ 0
1999 $ 0
2000 $450,000