Percentage-of-completion, computed and posted
Fintra recognizes revenue as you incur cost using the cost-to-cost input method - percent complete, earned revenue, and period revenue derived from your job costs and posted as balanced journal entries.
Illustrative product view
What the percentage-of-completion method is
The percentage-of-completion method recognizes revenue on a long-term contract as the work is performed, rather than all at once when the job finishes. Under ASC 606 it is the "over time" model, and the most common way to measure progress is the cost-to-cost input method: the share of total estimated cost you have already incurred.
Cost-to-cost percent complete
percent_complete = cost_to_date ÷ estimate_at_completion
Estimate at completion (EAC) is cost-to-date plus cost-to-complete. Percent complete is capped at 100% and guarded when EAC is zero.
The three numbers Fintra derives
| Number | Formula | Meaning |
|---|---|---|
| Percent complete | cost-to-date ÷ EAC | How far along the job is by cost |
| Earned revenue | percent complete × contract value | Total revenue earned to date |
| Period revenue | earned-to-date − previously recognized | What to recognize this period |
Change orders move the contract value
Earned revenue is percent complete times the current contract value, and current contract value is the original contract plus approved change orders. Pending change orders are excluded until approved, so revenue never runs ahead of a signed scope change.
- Approved COs increase contract value and the revised budget together.
- Pending COs are visible but excluded from recognized revenue.
- Every recognition run writes a WIP snapshot for audit.
Balanced entries, every time
A revenue-recognition run posts a balanced journal entry that reclassifies billings into revenue and books the contract asset or liability delta so the WIP schedule and GL tie out. The entry is asserted balanced before it posts, and AI proposes while a person approves.
Frequently asked questions
What is the percentage-of-completion method?
It is a revenue recognition method for long-term contracts that records revenue as work is performed instead of at completion. Progress is usually measured cost-to-cost - the ratio of costs incurred to total estimated costs - and revenue earned equals that percentage times the contract value. It is the ASC 606 over-time model.
How does the cost-to-cost method work?
Cost-to-cost measures percent complete as cost-to-date divided by the estimate at completion (total expected cost). Fintra multiplies that percentage by the contract value to get earned revenue, then recognizes the difference between earned-to-date and previously recognized revenue as the current period’s revenue.
Does Fintra support the completed-contract method?
No. Fintra recognizes construction revenue using cost-to-cost percentage-of-completion, the ASC 606 over-time input method. The completed-contract method - deferring all revenue until the job finishes - is not implemented.
What happens if my cost estimate changes mid-job?
Raising or lowering the estimate at completion changes percent complete on the next recognition run. Because period revenue is earned-to-date minus previously recognized, Fintra automatically books the catch-up - positive or negative - so cumulative revenue always matches the latest estimate.
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