<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/tp/onlinemanual/000339" xml:lang="en">
	<Header>
		<Title xmlns:ssa="http://www.ssaglobal.com" xmlns:HTML="http://www.w3.org/TR/REC-html40">Percentage of Completion Method</Title>
		<Keyword><Level1>Percentage of Completion</Level1>
		</Keyword>
	</Header>
	<AimSection><Paragraph>Select this method to recognize revenue on the basis of percentage of completion of a project/extension. The recognition of revenue with reference to the stage of completion of a contract is often referred to as the percentage of completion method.</Paragraph>
	</AimSection>
	<GeneralSection><Paragraph>Contract revenue is recognized as revenue in the income statement in the accounting periods in which the work is performed.</Paragraph>
		<Paragraph><GUIRef href="" role="manual">When to use this method</GUIRef>
		</Paragraph>
		<Paragraph>This method is used for projects, which have the contract type set to <GUIRef href="" role="manual">Fixed Price</GUIRef> and for projects that do not have hardware deliverables. Example: Engineering and development projects.</Paragraph>
		<Paragraph><GUIRef href="" role="manual">Calculation of revenue recognized</GUIRef>
		</Paragraph>
		<Paragraph><Emphasis>Revenue recognized = Percentage of Completion x Contract Amount</Emphasis>
		</Paragraph>
		<Paragraph>The contract amount is the sum of sub amounts by business partners. You can manually enter the percentage of completion or click <GUIRef href="" role="manual">Perc Completed</GUIRef> to get the calculated value. ERP calculates the percentage using the following formula:</Paragraph>
		<Paragraph><Emphasis>Percentage of Completion = Costs (incurred)/ Estimate at Completion cost.</Emphasis>
		</Paragraph>
		<Paragraph>Note: For extensions, the percentage of completion has to be entered manually, since the EAC is not defined for an extension.</Paragraph>
		<Paragraph><GUIRef href="" role="manual">Levels at which it can be recognized</GUIRef>:</Paragraph>
		<List><ListItem>Project</ListItem>
			<ListItem>Extension</ListItem>
		</List>
		<Paragraph><GUIRef href="" role="manual">Constraints</GUIRef>
		</Paragraph>
		<List><ListItem>Forecast Method in <Link href="/baanerp/tp/ppc/tpppc0100s000" role="session">PPC Parameters (tpppc0100s000)</Link> session, is set to Estimate to Complete/ Estimate at Completion.</ListItem>
			<ListItem>The <Link href="/baanerp/tp/ppc/tpppc4803m000" role="session">Build Actual Cost Control (tpppc4803m000)</Link> session must be executed to retrieve the latest aggregated cost (for project and extension) based on which the percentage completed is determined.</ListItem>
		</List>
	</GeneralSection>
	<RelatedTopics><SectionTitle>Related topics</SectionTitle>
		<RelTopic><Link href="/baanerp/tp/onlinemanual/000337" role="manual">Revenue Recognition (RR) and Cost of Goods Sold (COGS)</Link>
		</RelTopic>
	</RelatedTopics>
</ManualTopic>
