Percentage-of-Completion Tool
The valuation and recording of construction contracts in accordance with IAS 11 poses great challenges for accounting according to IFRS.
The percentage-of-completion method under IAS 11 provides for the agreed total revenue for long-term construction contracts to be recognised in profit and loss according to the percentage of completion of the order in each order processing period. For example, order revenue can be realised using the cost-to-cost method using the following formula:
In order to simplify the extensive and time-consuming valuation and data management of construction contracts, FAS AG has developed an MS Excel-based tool. This PoC tool can be used to plan projects based on a secondary cost structure which can be scaled up or down as required, and monitor them within integrated cost accounting. The tool also automatically determines the percentage of completion and can calculate any impending losses.
The tool covers the extensive disclosure requirements in IAS 11 as well as the calculation of journal entries for financial accounting purposes.
© FAS AG
You can request further information about the Percentage-of-Completion Tool using our contact form.
