Issue/Symptom/Question

How are costs adjusted if the Job Type is selected to Adjust Costs with a Projected Loss?

Applies To

Loss Recognition on Jobs

Job Type Setup

Resolution/Fix/Answer

If PENTA's revenue recognition process calculates a projected loss and the adjustment should be to Job Cost (based on Job Type Setting), then PENTA makes the JTD Cost greater than the revenue by the loss amount.   Therefore, after the adjustment, Revenue less Job to Date Cost is less than zero (a Loss).

Calculating the Adjustment PENTA makes to recognize the Loss:

Revenue  (using Rev Rec method) + Projected Loss  (Contract less Forecast at Complete) = New Job to Date Cost

New JTD – Actual JTD = Adjustment

NOTE: Penta is aware of a situation where a loss on a job using this method of Loss Recognition might occur twice.  If a period has been closed, a subsequent rev rec for the same period may book the loss again.  Penta is working towards resolving this situation.  Recommended practice is to only have one rev rec process per period in effect, and perform the close once everything is complete for the period, versus multiple rev recs and multiple closes of the same period.