Topic Thread

FInancial Statement Presentation of WIP Adjustment

  • 1.  FInancial Statement Presentation of WIP Adjustment

    Posted 05-08-2018 10:08
    Just wanted to get some opinions on where you have the WIP adjustment on your internal (unaudited) income statement. I just joined a new company and they have it at the bottom in Other Income and I think it should be in the revenues at the top.

    Thanks for the feedback.

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    Michael Soileau CPA, MBA
    Hernandez Consulting and Construction
    CFO
    NEW ORLEANS LA

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  • 2.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-08-2018 10:35
    Edited by Arin Knudtson 05-08-2018 10:37
    Michael -
    You are correct, the WIP adjustment should be included in revenues. As the purpose of the WIP adjustment is to adjust to actual revenues "earned" (as prior to the adjustment, revenues on the income statement typically represent billings on a project). We have G/L accounts specifically for revenues (4000-xxx) which agree to our total billed to date, and separate G/L accounts for the WIP Adjustment (4001-xxx). For financial statement purposes, they both flow through the revenues line item.

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    Arin Knudtson CPA, CCIFP
    Chief Financial Officer
    Journey Group Companies
    Sioux Falls SD
    (605) 332-5968
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  • 3.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-09-2018 09:37

    I second Arin's input – we do the same.

     

    CRAIG BERKEY

         CFO

       PALMETTO CORP OF CONWAY

         PHONE: 843-365-2156

         MOBILE: 843-602-3764

         FAX: 843-365-5436 )

         EMAIL: cberkey@palmettocorp.net

         WEB: www.palmettocorp.net

     

    PC

    Gen Contractors          Asphalt

     

     

     

     

     






  • 4.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-10-2018 06:53
    We include the WIP Revenue adjustment at the top of the P&L.  Placing it at the bottom would cause misleading swings in the presentation of our gross margin.

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    Lawrence Ward
    CFO
    RJB Contracting Inc.
    Spring City PA
    (484) 574-2019
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  • 5.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-09-2018 09:25
    ​We separate the over/under adjustment as a separate line on the P&L under revenue (Sales).  We used to not break it out, but having it separated makes the P&L much clearer.... vr, pete

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    Peter Gauger BS Accounting
    Accounting Manager
    TL Services, Inc.
    Van Buren AR
    (479) 474-7222
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  • 6.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-09-2018 12:25
    ​The revenue adjustment format is by far the preferred method for those of use as users of internal financial reporting and it better aligns with FYE CPA reporting as well.

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    Marc Hendrikson CPA, CCIFP, CGMA
    Senior Vice President
    Colorado Business Bank
    Denver CO
    (303) 383-1270
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  • 7.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-12-2018 14:33
    ​Michael,

    I might add that if you itemize the changes in the Over/Under Billing adjustment on your financial statement as a separate line item from the Sales/Billings accounts, it will be informative for you and the management team to see changes in billing patterns.  For example,

    • When billings drop significantly in a month (or for consecutive months), you need to discover what is occurring, as this (a) will effect your future cash flow and/or (b) is confirming the slowdown your backlog has already identified is coming.
    • If the net O/U amount happens to be increasing at the same time the billings are dropping, your team is likely not billing well.
    There are more things to think through in the different combinations of changes that can occur.  However, having that one extra piece of detail handy, is very useful from a high level.

    Tom

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    Thomas Miele CMA
    Director of Financial Management and Operations
    Center Line Electric
    Center Line MI
    (586) 757-5505
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  • 8.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-14-2018 11:56
    ​Hi Michael,

    I wholeheartedly agree with you.  We run our Over/Under WIP adjustment as part of revenues above the line.

    Monte

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    Monte Smith CMA, CCIFP
    Controller
    Gerding Companies, Inc.
    Corvallis OR
    (541) 753-2012
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  • 9.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-15-2018 13:12
    We carry the O/U adjustment in our revenues as that seems like the most honest presentation to us. And obviously the under and over billings also show in the current assets and current liabilities respectively on our balance sheet.

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    Frank Carpenter
    Controller
    Morris, Inc.
    Newport Beach CA
    (949) 812-1145
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  • 10.  RE: FInancial Statement Presentation of WIP Adjustment

    Posted 05-16-2018 07:17
    We also include U/O as part of our revenues above the line as this represents what we have truly earned.

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    Donna Armstrong BSc
    Accounting Manager
    Fritz-Rumer-Cooke Co., Inc
    COLUMBUS OH
    (614) 444-8844
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