Completed Contract Method


C

Charlie Brown

I am looking for a resource that clearly explains the CCM accounting method.

I am putting together a worksheet that would allow me to forecast revenue ,
gross margin, ETC.. based on future costs.

I am not an accountant, I am an operations guy trying to forecast business
results out 24 months based on how we predict we will expend costs and
complete projects. I have done it for POC but am being asked to incorporate
CCM for smaller operations
 
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J

Jim Hudspeth

Charlie said:
I am looking for a resource that clearly explains the CCM accounting
method.
Clearly but simply, the completed contract method recognizes profits when
the job is complete, and not before.

Prior to completion, costs are recorded as assets and receipts are recorded
as liabilities.
I am putting together a worksheet that would allow me to forecast revenue
, gross margin, ETC.. based on future costs.
I am not an accountant, I am an operations guy trying to forecast business
results out 24 months based on how we predict we will expend costs and
complete projects. I have done it for POC but am being asked to
incorporate CCM for smaller operations
Are you trying to forecast cash flow or GAAP profits? They are not the
same.

Jim Hudspeth
 
C

Charlie Brown

I am trying to forecast profits and the impact if there are cost overruns.
 
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J

Jim Hudspeth

Charlie said:
I am trying to forecast profits and the impact if there are cost overruns.
Normally the loss would be recognized at the end of the job.

This could present a problem if the anticipated loss is significant and the
job covers two or more accounting periods. I have never faced this
problem. Without some research and an in-depth knowledge of all the facts
and circumstances I would not want to comment further.

With regards to financial reporting, I use percentage of completion on all
significant jobs, and only use completed contract for convience on small
jobs that begin and end in the same accounting period.


Jim Hudspeth
 

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