Profit to be taken to Profit & Loss in case of Incomplete Contracts.
1. When the work certified is less than ¼ of the contract price: No profits to profit and loss account.
2. When the work certified is ¼ but less than ½ of the contract price :
Profit to date x 1/3 x Cash received / Work certified
3. When the work certified is ½ or more of the contract price :
Profit to date x 2/3 x Cash received / Work Certified
4. When contract is almost complete and further estimated expenditure is given : Estimated Total Profit x work certified ÷ contract price x Cash received ÷ work certified
5. In case of loss :
The entire loss to be transferred to Profit & Loss Account.
6. When the contract is nearing completion:
Profit to be taken = Estimated profit x Work certified ÷ Contract price (or)
Estimated profit x Cost of work to date ÷ Estimated total cost (or)
Estimated profit x cost of work to date ÷ Estimated total cost x cash received ÷ work certified