7 Replies Latest reply on Feb 25, 2013 7:03 PM by user633043

    Revenue Recognition using Cost-to-Cost (Percent Spent) method

      Hi Dina/Krishna,

      Please help me out in understanding the calculation as per costs to cost mapping with the example below.

      Contract Value=100,000/- (inclusive of profit)
      Profit Margin=25% => so i guess Cost Budget will be 75,000/-

      Actual cost is incurred in four different stages:
      1: Material delivery to customer=5000/-
      2. Work Completion1=20,000/-
      3. Work Completion2=10,000/-
      4. Work Completion3=40,000/-

      Please explain as how stage wise revenue is arrived using the cost-to-cost (percent spent) method. Although, i apply the formula [AC/BC*(BR-ER)]-AR, i am not able to interpret the results....request you humbly to help me out in understanding it. I have been breaking my head since long time to understand this.

      This would of great help