Percentage of Completion Accounting Method for Long Term. Construction Contracts. Accounting Treatment For Software Implementation Costs Capitalized' title='Accounting Treatment For Software Implementation Costs Capitalized' />The. Percentage of Completion Method of Accounting for Long Term. Construction Contracts. According to ARB No. SOP 8. 1 1by William Brighenti, Certified Public Accountant, Certified Quick. Books. Pro. Advisor. Although. there was never an individual FASB. Financial Accounting Standards Boards Statement or APB Accounting. Principles Boards Opinion on the accounting for construction. AICPA. American Institute of Certified Public Accountants have constituted. GAAP Generally Accepted Accounting Principles for construction. ARB Accounting Research Bulletin No. Long Term Construction Type Contracts 1. SOP Statement of Position 8. Accounting. for Performance of. Construction Type and Certain Production Type Contracts 1. AICPA. Audit and Accounting Guide, Construction Contractors. These pronouncements permitted the use of two different accounting. Completed Contract Percentage of Completion. The completed contract method recognizes revenue upon completion of the. The two methods should not be used for the same circumstances as. The percentage of completion method ordinarily is to. New-Accounting-Rules21.jpg' alt='Accounting Treatment For Software Implementation Costs Capitalized' title='Accounting Treatment For Software Implementation Costs Capitalized' />Accounting for Costs of Computer Software Developed or Obtained for Internal Use POLICY STATEMENT The AICPAs Statement of Position SOP 981 requires that. DR IV E N B Y VALU EVALU E FreeportMcMoRan Inc. FreeportMcMoRan or the company is a leading international. Accounting Treatment For Software Implementation Costs Capitalized' title='Accounting Treatment For Software Implementation Costs Capitalized' />Can the cost of an outside consultant be capitalized if it is for getting the current system up to speed for a new software module installationWhere reasonably reliable estimates cannot be. Air Data 54 Usb Drivers there. Where the results of using the completed contract. It is ordinarily presumed that virtually all contractors are capable of. SOP 8. 1 1 states For entities engaged on a. Persuasive evidence to the contrary is necessary to overcome that. The ability to produce reasonably dependable estimates is an essential. Accordingly, entities with significant. Consequently, the burden of proof rests upon the contractor to justify. SOP 8. 1 1 clearly specifies a preference for the. Moreover, SOP 8. 1 1 does not excuse the. Contractors who have. If they are still unable to. In essence, SOP 8. In. other words, meeting the exception for not using the. On the other hand, attempts to meet the second exception in order to. In order to substantiate that the results of. Of course, the question is if the results did not differ. Unless the contracts were unenforceable, pending litigation, or. Otherwise, specific, persuasive. Moreover, even though both. For most contractors, the real problem with using the. Even the most sophisticated. Excelin order to produce accurate. Contributing to the problem of reporting revenue in accordance with the. For many small contractors, that often means the. Quick. Booksare kept on the cash basis of. Of course, the cash basis of. Other contractors. AIA requisitions are submitted and. Although the percentage of completion method of accounting is not cash. Contractors are notorious for. Similarly, invoices from subcontractors and vendors. As a result, in the. In short, whether contractors employ cash or accrual basis accounting. First, the contractor would need to. Failure to do so would impair the. This percentage is then applied. Thus, if all. costs were not included, the percentage of completion would understate. Second, and equally as important, the contractor would need to ensure. The omission of this step could have serious. In addition to. direct materials. But determining which. For the sake of simplicity and expediency, it is often recommended that. For the most part, there are only a few. Of course, tax depreciation would be reported on. Although contract related research and development. GAAP would not. permit such treatment on financial statements. Except for the above two mentioned expenses. Contract administrative expense. Officer salaries. Administrative support departments. Pensions and profit sharing Rework, scrap, and spoilage. Successful bidding expense. Engineering and design. Storage, handling, purchasing, and. Of course, the following indirect costs would. Rent of construction equipment and. Repairs of construction equipment and. Maintenance. Utilities. Tools. Supplies. Inspection, quality control. Indirect labor salaries and wages. Payroll taxes. Fringe benefits. Workers compensation insurance. Liability insurance. Certain taxes. By doing such, the amount of work involved in the conversion of. FASB has traditionally endorsed for all accounting methodology. Third, any mixed indirect overhead costs would need to be first. Of. course, strictly selling and general and administrative. Amounts. representing construction activity would be allocated to the. Fourth, after all expenses had been recorded and accrued, and all. Total estimated costs, or more precisely, total. Ideally, this process should involve. Because conditions change daily. Again, failure to do so will distort operating. After all of the above steps are completed, it is now time to compute. As previously mentioned, the degree. However, other rational. For example, physical measures of output. Once the particular measure of completion is determined, then the. Percent complete. Total estimated measure. Using the cost to cost measure, the percentage of completion is. Percent complete. Total estimated. costs of contract. Then total estimated revenues or gross profit is then multiplied by. Gross profit to date. Percent complete X Total estimated gross profit. An example of the computation and the respective journal entries can be. The. Percentage of Completion Method by William Brighenti, Certified. Public Accountant. As one can see, the percentage of completion. Only under rare circumstances would the. Although conceptually the percentage of completion method is not. Contractors are often careless in accruing all. With the involvement of all members of the. This article is provided for informational purposes and is. For further information, please consult. Have a tax, a Quick. Books, or an accounting question  Please feel. Comments on our. Accounting, Quick. Books, and Taxes by. William Brighenti. Certified Public. Accountant, Accountants CPA Hartford, LLC. For. Quick. Books, or accounting issue, please visit our. Accountants CPA. Hartford, LLC. Please visit our sister website, Intense Flavors. Quick. Books, and taxes. If and only. to the extent that this publication contains contributions from tax. Circular 2. 30, as promulgated. United States Department of the Treasury, the publisher, on. U. S. federal tax advice that is. Internal Revenue Service, and it cannot be used by any. The above tax advice was. The taxpayer recipients of this offering.