completed-contract method

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Completed-Contract Method

In construction and project finance, a method for calculating profits and losses in which revenue is recognized only after the physical completion of the contract. This differs from the completed-contract method, which recognizes revenue as it is received, provided that it is prorated according to the percentage of the project that is complete. Each method may have its own tax advantages.

completed-contract method

A method of recognizing revenues and costs from a long-term project in which profit is recorded only when the project has been completed. Even if payments are received while the project is in progress, no revenues are recorded until its completion. The completed-contract method is a conservative way of accounting for long-term undertakings and is used for certain types of construction projects. Compare percentage-of-completion method.
References in periodicals archive ?
The lower revenue and net operating profit over half-year 2008 figures of AED 8,126 million ($2,212 million) and AED 3,011 million ($820 million), respectively are attributed to the overall economic slowdown following the global economic crisis, and Emaar's new revenue recognition policy based on completed contract method.
As of January 1, 2009, Emaar has revised its revenue recognition policy based on the new recommendation of the International Accounting Standard Board (IASB) relating to the International Financial Reporting Interpretations Committee (IFRIC) 15 - Agreements for the Construction of Real Estate, to recognize revenue based on completed contract method.
The company said the change resulted from one contract that was recorded on the percentage-of-completion method rather than the completed contract method, but the adjustment did not change reported gross margin, loss per share or cash balances.
We were involved in one matter related to a company's use of the completed contract method of tax accounting.
COMPARISON OF MCDERMOTT'S PERCENTAGE-OF-COMPLETION RESULTS AS REPORTED TO COMPLETED CONTRACT METHOD OF ACCOUNTING ON FIVE LOSS GENERATING EPIC PROJECTS (1) (UNAUDITED, $ MILLIONS) McDermott Expected Annual difference to Results if reported results if McDermott Reported Completed Contract Completed Contract Results (2) Accounting Accounting Used Pre-tax Pre-tax Pre-tax Full Income/ Income/ Income/ Year Revenue (Loss) Revenue (Loss) Revenue (Loss) 2001 $1,888.
Exempt methods commonly used to account for home construction contracts include the completed contract method (CCM) and the accrual method.
lt;p>In the case of completed contract method of revenue recognition, the revenue and related profit for a project sold can only be recognised when the project is handed over to the customers.
This total will differ from monthly drilling days considered in determining revenues and expenses for financial reporting purposes because the Company uses the completed contract method of accounting on turnkey contracts for financial statement purposes.
We recognize sales under the completed contract method, and our product manufacturing time from engineering to shipment on major jobs exceeds ninety days.
In a line of cases in the 1980s, the IRS tried to deny use of LIFO to users of the completed contract method (CCM), but the Tax Court rejected those efforts.
A taxpayer may use the completed contract method to determine the taxable income for a long-term construction contract if - the taxpayer estimates that the contract will be completed within 24 months; and - the taxpayer's average annual gross receipts, for the three tax years preceding the tax year in which the contract is entered into, do not exceed $10 million (Sec.
Recent Developments Concerning the Completed Contract Method of Accounting

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