Today, we’re excited to announce a meaningful update to the Work-in-Progress (WIP) module in ProNovos. It’s a small change with a big impact: you can now enter uninstalled costs directly into your WIP calculations.
Published November 26, 2024 . 2 mins read
Uninstalled Costs in WIP: A Step Toward Better Revenue Recognition
Product Updates
Why Uninstalled Costs Matter
Revenue recognition is a critical part of project accounting, especially under the standards of ASC 606, which emphasize aligning revenue with performance obligations. For construction contractors, this often means recognizing revenue based on job progress. However, a challenge arises when materials are purchased and delivered but haven’t yet been installed. These uninstalled costs inflate the overall job costs to date, leading to distorted calculations of project progress and revenue recognition.
By separating uninstalled costs, contractors can work with a more accurate cost-to-date number, ensuring compliance with ASC 606 while improving the precision of their financial reporting.
Kevin Bright
Product Manager, ProNovos
How It Works in ProNovos
With this new feature in ProNovos WIP, you can now:
• Add columns for installed and uninstalled costs.
• Enter uninstalled costs: Track the cost of materials that are on-site but not yet installed.
• Uninstalled costs are subtracted from job costs to date: This adjustment provides a more accurate calculation of project progress.
• Recognize revenue accurately: Use the adjusted cost-to-date number to determine revenue recognition that aligns perfectly with ASC 606 requirements.
This feature not only ensures compliance with accounting standards but also improves the transparency and reliability of your project financials.
Doing More With Less Effort
Here’s what makes this change meaningful:
• Precision Without the Pain: No more overestimating revenue just because materials have been delivered.
• Better Compliance: Stay in line with ASC 606 without adding extra steps to your workflow.
• Clarity for Stakeholders: Whether it’s internal teams or external auditors, everyone gets a clearer picture of project performance.
