Percentage of Completion Method

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This is an accounting method commonly used in the Home Builders and General Contractors industries to recognize revenue earned over time. Exact methods vary by company, but the main principle is that the company recognizes revenue earned depending on the percentage of the project that has been completed. For example, if a company began working on a project worth $5,000 with a two year completion schedule, after the first year the company would report that it had earned $2,500 in revenue ($5,000 * (1/2)).

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