<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/tp/onlinemanual/000339" xml:lang="en">
   <Header>
      <Title>Percentage Complete Method</Title>
      <Keyword type="header" order="d1e2605693">
         <Level1>Percentage Complete</Level1>
         <Level2>revenue recognition methods</Level2>
      </Keyword>
      <Keyword type="header" order="d1e2605698">
         <Level1>Revenue recognition methods</Level1>
         <Level2>Percentage Complete</Level2>
      </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>
      <List>
         <ListItemHead>When to use this method</ListItemHead>
         <ListItem>
            <List>
               <ListIntro>This method is used for:</ListIntro>
               <ListItem>Projects that have the contract type set to <GUIRef href="/baanerp/tp/domains/pdm.agty#contract" role="option">Fixed Price Contract</GUIRef>.</ListItem>
               <ListItem>Projects that do not have hardware deliverables.</ListItem>
            </List>
            <Paragraph>Example: Engineering and development projects.</Paragraph>
         </ListItem>
         <ListItemHead>Calculation of revenue recognized</ListItemHead>
         <ListItem>
            <Paragraph>ERP Enterprise calculates the revenue recognized using the following formula:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>Revenue recognized = Percentage Complete * Contract Amount</Paragraph>
            </Formula>
            <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 Enterprise calculates the
			 percentage using the following formula:</Paragraph>
            <Formula space-and-orientation="indented-estimated">
               <Paragraph>Percentage Complete = Costs (incurred)/ Estimate at Completion cost</Paragraph>
            </Formula>
            <Paragraph>Note:
			 For extensions, the percentage complete must be entered manually, because the
			 EAC is not defined for an extension.</Paragraph>
         </ListItem>
      </List>
      <List>
         <ListIntro>Levels at which it can be recognized:</ListIntro>
         <ListItem>Project</ListItem>
         <ListItem>Extension</ListItem>
      </List>
      <List>
         <ListIntro>Constraints:</ListIntro>
         <ListItem>In the <Link href="/baanerp/tp/ppc/tpppc0100s000" role="session">Project Progress Parameters (tpppc0100s000)</Link> session, <GUIRef href="/baanerp/tp/ppc/tpppc0100s000#tpppc000.lfcm" role="manual">Leading Forecast Method</GUIRef> is set to <GUIRef href="/baanerp/tp/domains/pdm.lfcm#est.to.compl" role="option">Estimate to Complete</GUIRef> or <GUIRef href="/baanerp/tp/domains/pdm.lfcm#est.at.compl" role="option">Estimate at Completion</GUIRef>.</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 complete 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>