I work for an engineering firm where we use percentage of completion revenue recognition. However, we base our percent complete on labor only. This is because we typically receive no markup on outside subcontractors or other direct expenses we incur on the projects. For this reason we exclude them from percent complete and recognize dollar for dollar revenue when we incur these costs, but no profit. So in a period where a project incurs $5,000 of sub consultant cost we would recognize $5,000 of cost and $5,000 of revenue with no margin.
Much of the guidance on this topic simply talks about using total cost and does not mention excluding pass thru costs. Dies anyone have any knowledge of this?
Thank you
Much of the guidance on this topic simply talks about using total cost and does not mention excluding pass thru costs. Dies anyone have any knowledge of this?
Thank you