Method A, Posting/Account Category/Segmented

Posting/Account Category/Segmented contract are broken down into smaller components for revenue recognition purposes in a way that is similar to segmented contracts. However, the percentage of completion for a posting/account category/segmented contract is calculated for account categories at the posting level rather than for posting activities.

In order to use the posting/account category/segmented option, you must have defined budgets for the posting level activities listed on Contract Account Category Detail (BR12.2). Only those activities that have been flagged Yes (Y) in the Inc Activity field will be included in the revenue recognition calculation.

In the United States, generally accepted accounting principles allow contracts to be segmented under certain circumstances. For specific circumstances, see SOP 81-1, Accounting for Performance of Construction-Type, and Certain Production-Type Contracts.

Example 5 - Method A, Posting/Account Category/Segmented

Note: Only those account categories which have accumulated costs recognize the revenue.

Because SBC is segmenting this contract at the account category, the percentage of completion revenue is calculated and posted to the posting level account categories.