Author: Kennard S. Brackney, Ph.D., Appalachian State University and Philip R. Witmer, Ph.D., Appalachian State University

The percentage-of-completion method of accounting for long-term construction projects represents an important exception to the principle that revenue is not recognized until the associated performance obligation has been fully satisfied. This method remains relevant, despite the recent Accounting Standards Update (ASU) from the Financial Accounting Standards Board (FASB) that rewrites much of the existing guidance on revenue recognition. Our paper reviews the application of the percentage-of completion method and presents an Excel spreadsheet that can be used by instructors to help teach the topic and by accounting students to help solidify some of the more difficult concepts. The teaching aid presented also allows instructors to advance the discussion beyond where most intermediate accounting textbooks’ discussions stop.

This article is from the Accounting Instructor’s Resource, an electronic journal that provides teaching tips and insights to those who teach accounting and other business courses.

Read: Long-Term Construction Using the Percentage-of-Completion Method: A Teaching Aid

Access the Excel Spreadsheet: Pct of Completion Template