<P> 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 . The contract is considered complete when the costs remaining are insignificant . </P> <P> Accounting for long term contracts can be done in two ways: through the completed - contract method and the percentage of completion method . The choice between the two depends on the provisions of SOP 81 - 1 from the AICPA . The completed - contract method recognizes income only when the contract is completed or substantially completed . </P> <P> The completed - contract method is used when costs are difficult to estimate, there are many ongoing small jobs (one time work), and projects are of short duration . This method can be used only when the job will be completed within two years from inception of a contract . </P>

When is revenue recognized under the completed-contract method