percentage-of-completion method

The percentage-of-completion method is an accounting approach used to recognize revenue and expenses on long-term projects, like construction. Instead of waiting until a project is fully completed to account for all costs and income, this method calculates how much of the project is completed at any given time. Revenue and expenses are recorded based on completed work, often determined by comparing costs incurred to total estimated costs. This approach provides a more accurate financial picture throughout the project's duration, reflecting ongoing progress rather than a sudden change in financial status upon completion.