percentage-of-completion method

Percentage-of-Completion Method

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

A method of recognizing revenues and costs from a long-term project in relation to the percentage completed during the course of the project. Thus, the percentage-of-completion method allows a business profits (or losses) on a project before its completion. Compare completed-contract method.
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References in periodicals archive ?
* Not account for long-term construction contracts using the percentage-of-completion method (PCM) of accounting (Sec.
In addition, taxpayers that meet the $25 million threshold are exempted from using the percentage-of-completion method for small construction contracts entered into after Dec.
The company determined that it should have applied the percentage-of-completion method of accounting under the FASB's Accounting Standards Codification No.
Under the old law, if your company had more than $10 million in revenue, you were required to file your return using the percentage-of-completion method for construction, installation and manufacturing contracts.
The big change, in a nutshell, is a move away from a strict percentage-of-completion method to recognizing revenue under a new revenue recognition model.
Large contractors are required to account for long-term contracts using the percentage-of-completion method, also known as PCM, for their general-construction contracts.
Taxpayers with long-term contracts must use the percentage-of-completion method under Sec.
At present, revenues from the industry's sales of condominium units are recognized under the percentage-of-completion method. Under this method, provided certain criteria are met, the gross income from the presale of condominium units is recognized based on the stage of completion.
GAAP requires the percentage-of-completion method unless reliable estimates cannot be made.
Revenues from fixed-price contracts are recognised using the percentage-of-completion method (they are calculated as the proportion of the cost of effort incurred up to the reporting date to the estimated cost of total effort).
The company also stated that it will now submit a plan of compliance no later than 14 May 2012 explaining that the complexities and complications of the restatement recognising revenue using the percentage-of-completion method rather than multiple deliverable elements resulted in its inability to file within the 5-day extension period that ended 14 February 2012.
That is a misconception, however; the percentage-of-completion method of accounting will not face extinction if the proposal becomes a final standard.