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Jan 30, 2020 at 08:23 AM

Percentage-of-completion method sales may exceed order amount

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Dear community,

We want to use percentage-of-completion method in customer projects.
I am trying the recognition key SPFC.
However, in that case, if the actual costs exceed the planned costs, the progress-based sales exceed the sales order amount.
I think this revenue recognition is incorrect.

case)
sales order:1000
planned cost:500
actual cost:600
percentage-of-completion:120%
progress-based sales:1000*1.2=1200

Sales order is fixed and there is no hope for 1200.
I want the limit of percentage-of-completion to be 100%.
Would you please advise me about something?

Regards,
Yoshikazu Iwasawa