A closer look at the percentage-of-completion method
Abstract: Clearly, lenders need ways to determine whether their borrowers are maintaining profitability. One way is to learn about the accounting methods they use, including how subjective their assumptions are when reporting their financial statements. Businesses that engage in long-term contracts frequently use the percentage-of-completion method to record contracts and revenues. This article looks at the ins and outs of this method, including what kinds of businesses typically use it and how it works.