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Revenues and gross profit are recognized each period based on the construction progress, in other words, the percentage of completion. Construction costs plus gross profit earned to date are accumulated in an asset account (construction in process, also called construction in progress), and progress billings are accumulated in a liability account (billing on construction in process).
The following is a list of trades in construction. Bell hanger installs mechanical and electrical bell systems; Boilermaker, works in nuclear, oil and gas industry, shipyards, refineries, and chemical plants, on boilers, pressure vessels, and similar equipment. Carpenter, a craftsperson who performs carpentry, building mainly with wood. [1]
The Completed-contract method is an accounting method of work-in-progress evaluation, for recording long-term contracts. GAAP allows another method of revenue recognition for long-term construction contracts, the percentage-of-completion method. With this method, revenue is recognized when the contract is fulfilled.
In the United States construction industry, contract agreements are usually written to allow the owner to withhold (retain) the final payment to the general contractor as "retainage". [3] The contractor is bound by the contract to complete a list of contract items, called a punch list, in order to receive final payment from the owner.
A clerk of works or clerk of the works (CoW) is employed by an architect or a client on a construction site.The role is primarily to represent the interests of the client in regard to ensuring that the quality of both materials and workmanship are in accordance with the design information such as specification and engineering drawings, in addition to recognized quality standards.
An accountancy term, construction in progress (CIP) asset or capital work in progress entry records the cost of construction work, which is not yet completed (typically, applied to capital budget items). A CIP item is not depreciated until the asset is placed in service. Normally, upon completion, a CIP item is reclassified, and the ...
A Allocation of costs is the transfer of costs from one cost item to one or more other cost items. Allowance - a value in an estimate to cover the cost of known but not yet fully defined work. As-sold estimate - the estimate which matches the agreed items and price for the project scope. B Basis of estimate (BOE) - a document which describes the scope basis, pricing basis, methods ...
Work breakdown structure (WBS) is a method and a kind of representation that defines a project and groups the project's discrete work elements in a way that helps organize and define the total work scope of the project. A Work breakdown structure element may be a product, data, a service, or any combination.