completed contract method

The completed contract method is an accounting approach used primarily in long-term projects, like construction. Under this method, a company recognizes revenue and expenses only when a project is fully completed. This means that until the project is finished, no income or costs are recorded on the financial statements. It helps companies avoid fluctuations in income during the project and provides a clearer view of overall profitability once the project is done. However, it may not reflect ongoing work or financial health during the project’s duration.