General Information about Percentage-of-Completion Method

What Is Percentage-of-Completion Method?

The percentage-of-completion method (PCM) is one out of two alternatives used to handle work in progress during year-end closing. PCM means that income is registered as the services are being performed and the material is consumed. You perform accrual accounting for the income, and the costs are charged to expense at the time when the material is consumed. The accrual accounting for the income is based on the stage of completion, that is, the percentage portion of a task that is considered to be completed by the date of closing balance. The other method used to manage work in progress is the completed contract method.

Getting Started

Before you can start using the percentage-of-completion method, there are some settings that must be configured:

Settings in the Register Basic Data - Project Procedure

Settings in the Chart of Accounts / Standard Accounts Procedure

Settings in the Number Series and Voucher Number Series Procedures

Integrate Revenue Calculation Ledger into Accounting

Editable Stage of Completion in the Revenue Calculation

Account Types on Accounts

When you have configured the settings above, then additional fields will be added to the Register Project procedures for projects using the percentage-of-completion method.

The Register Project Procedure when Using Percentage-of-Completion Method

Work Flow

The Revenue Calculation Procedure

Print Revenue Calculation Ledger / Accounting Orders

Reversal Voucher

Follow-up Features

When using PCM the following options exist to follow-up on calculations made. You will also find the following options for reconciliation against other list regarding inventory and invoice bases.