We are evaluating revenue recognition practices for our Facilities division and I would be interested to hear how other contractors are handling this from a GAAP and practical standpoint.
Our Facilities department primarily performs smaller service and repair-type jobs, most of which are completed in less than one week. These jobs are different in nature from our larger new construction and remodel projects, where we use percent-complete accounting.
For those of you with similar Facilities or Service divisions:
- Are you using percent-complete accounting for these short-duration jobs?
- Has anyone elected to use completed contract (or effectively recognize revenue upon completion/billing) for these types of jobs?
From a practical standpoint, we are finding that applying the percent-complete method to small, short-term jobs creates significant administrative effort with limited value to the financial statements. We are considering whether a completed-contract approach may be more appropriate for these jobs, while continuing percent-complete for larger construction projects.
I would appreciate hearing how others in the industry are handling this.
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Jayna Bertholf
Director of Finance
Zernco, Inc.
Wichita KS
(316) 775-9991
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