General Inquiries

Percent of Complete based on hours

  • 1.  Percent of Complete based on hours

    Posted 02-14-2020 08:24
    Good morning,

    I am looking for guidance on determining completion percentage and revenue recognition based only on hours.  Most of the companies I am familiar with use cost to cost.  I have been told the reason this company uses hours is because they buy a lot of equipment up front and their auditor told them that if they use cost to cost it does not really reflect how far along they are on the job.  Any pros/cons or specific accounting guidance would be greatly appreciated.

    Thanks,

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    Fred Cook CCIFP
    Senior Director, Accounting and Finance
    All Pro Integrated Systems
    Pensacola FL
    (850) 925-9822
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  • 2.  RE: Percent of Complete based on hours

    Posted 02-16-2020 10:23
    We start with cost to cost, then adjust each project based on hours to land on what we see as "efforts expended".  In our case we run in to the issue of advanced purchases of equipment that we have not received or installed, and also delayed billings on equipment that we have already received/installed. We've tried to book accrual entries for these items, but it was too much work.  We are a small company and aren't required to use PCM.  We do it on the side and keep our books on the Accrual Method.

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    Cindi Krippendorf
    CFO
    Fielding Electric,Inc.
    Torrance CA
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