The completed contract method is an accounting method that enables a business to postpone the reporting of income and expenses until a contract is completed. The recognition of these revenues and expenses is delayed until contract completion even though cash payments may be received or paid during the contract period. This accounting method is often used in the construction industry or other industries whose businesses involve long-term contracts.

Typically, both expenses and billings are recorded against WIP Balance Sheet Accounts in GL until the job is complete; the costs and billing are then moved to P&L Accounts.

JC/USECCM - Use Completed Contract Method

Whether to use the Completed Contract Method.

The Completed Contract Method is an accounting method that enables a business to postpone the reporting of income and expenses until a contract is completed. The recognition of these revenues and expenses is delayed until contract completion even though cash payments may be received or paid during the contract period.

GL/CCMTTYPE - Contract Completed Method Transaction Type

The Transaction Type used for GL Batches when processing CCM Jobs.

Using Recognized Revenue Methods, set up a method with the Calculation set to Completed Contract.

When setting up standard cost types, specify the WIP accounts that are used for jobs that use the Completed Contract method.

Standard Cost Types Screen

Jobs on which Completed Contract Method is not used do not use the WIP accounts; they continue to use the GL Accounts tied to P&L.

For jobs using the Completed Contract Method, set the Recognized Revenue Method field to the method set up above. Another field then becomes visible: Complete for Rev Rec.

When Complete for Rev Rec is checked and the file is saved, the date is recorded and displayed. It can be unchecked; unchecking does not reverse out any processing done from Processing – Contract Completed Method.

On the Cost Code Maintenance page, when setting up cost codes for the job, in the GL Accounts section, specify the WIP accounts to use. These default from the Standard Cost Type. Costs and billing will be posted to these accounts during the life of the job. When Complete for Rev Rec is checked and Process Contract Completed Method is run, the costs and billing amounts are moved from the WIP Accounts to the GL (P&L) Accounts defined on the cost codes.

Use Process Contract Completed Method to process jobs that use the Contract Completed method and have been marked as Complete for Rev Rec, and to create journals to move cost and billing values from the WIP accounts to the associated cost and billing GL accounts in the P&L.

The report processes cost and billing transactions for the selected fiscal period range and selected jobs, cost codes and cost categories. The movement of costs and billing is accumulated for each cost category and stored as a movement. Any additional processing will add to this and any reversal will reduce this value. The Prior Moved Costs will always be Total Cost minus Costs to Move, and the Prior Moved Billing will always be Total Billing minus Billing to Move. The report only processes jobs that are set for a Completed Contract Method and which have been marked as Complete for Rev Rec.

If Report Only is not checked, the process creates a General Ledger journal using the transaction type specified by the GL parameter CCMTTYPE; this is posted automatically.

The cost and billing transactions are marked as processed by Contract Completed Method.

This process can be re-run if further costs are incurred after the job has been marked as Complete for Rev Rec.