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You are here: Home / Timely Reports / Accounting for Construction Contracts Under the Percentage of Completion Method

May 24, 2016 by fiscaldoctor

Accounting for Construction Contracts Under the Percentage of Completion Method

Welcome, I’m Gary Patterson. Let’s talk about the percentage of completion accounting method for construction contracts. What does that mean you may think? Well a lot of contracts extend over multiple periods, months, quarters even years and you have to do a really good job to understand where you are making money. Hence, the issue becomes what is the percentage of the job that’s done, not the money that’s been spent and why is this important? Well, construction people are extremely good entrepreneurs, they manage to draw, collect more money than they have really earned and you have to have timely estimates so that the accounting and the operational people know where they really stand and here’s the other issue, I hate to tell you this. If you don’t do a really good job on understanding where you are, you get in this situation where you lose control of where you are making money and the last 10% of the job costs 20 or 30%, not very good. So don’t go out and spend all the money on lake houses in Big Iron, you might need it. Thank you.

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http://smallbusiness.chron.com/accounting-construction-contracts-under-percentage-completion-method-78097.html

Filed Under: Timely Reports Tagged With: % completion revenue recognition revenues

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Gary W. Patterson, The Fiscal Doctor

812 Hallbrook Lane, Alpharetta, GA 30004
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Gary W. Patterson, The Fiscal Doctor

812 Hallbrook Lane, Alpharetta, GA 30004
Contact No: 678-319-4739
Email: info (at) fiscaldoctor (dot) com

Copyright © 2016 - All Rights Reserved - Website Design by Pixelion Art

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