# Percentage Completion Method Example

It is important to visually grasp the percentage completion method for full understanding. The following is a percentage of completion method example to help explain how the method works within a company. Bob is a project accountant for Whistle-at-You Construction Co. Because he is the primary project accountant for his company, this brings with it multiple additional responsibilities. He is responsible for all transactions and yearly revenue for a new tower project that is estimated to take 5 years to complete. Costs and revenues will be recorded at an accrual basis during this 5 year window of production. Whistle-at-You Construction uses the percentage of completion method of revenue recognition for all projects that will take over a year to complete. Bob has obtained and would account for the following information concerning the project over the five year period as follows:

## General Information:

Estimated Project Cost = \$500 million

Total Project Revenue = \$750 million

#### Year 1:

Cost = \$80 million

Percentage Complete = 16%

Revenue = \$120 million

Income = \$40 million

#### Year 2:

Cost = \$100 million

Percentage Complete = 20%

Revenue = \$150 million

Income = \$50 million

#### Year 3:

Cost = \$110 million

Percentage Complete = 22%

Revenue = \$165 million

Income = \$55 million

#### Year 4:

Cost = \$90 million

Percentage Complete = 18%

Revenue = \$135 million

Income = \$45 million

#### Year 5:

Cost = \$120 million

Percentage Complete = 24%

Revenue = \$180 million

Income = \$60 million