Method A, Nonsegmented

With nonsegmented contracts, the percentage of completion is determined at the level at which you established your revenue recognition contract parameters for the contract. That percentage is then used to calculate revenue for each activity that you flagged Yes (Y) in the Inc Activity field on Contract Detail (BR10.2).

In the United States, nonsegmented contracts are used when the contracts are not eligible for segmenting as defined in SOP 81-1, Accounting for Performance of Construction-Type, and Certain Production-Type Contracts.

Example 2 - Method A, Nonsegmented

Note: Using this method can result in revenue being recognized for activities that have not incurred any costs to date. If you are required to use nonsegmented contracts and want revenue to be recognized proportionally, use Method B (Gross Margin) with nonsegmented contracts.

Percentage of completion is calculated at the contract level. Budgets are determined at the posting level. There is not a revenue recognition need for budgets to be maintained at the posting level.