New WIP Summary
Some businesses produce financials based on completed contract in which they record their revenue only when the project is finished. Some other businesses record revenue on a percent complete in which they recognize the revenue progressively through the life of a job.
Until recently there was no single report available in QuickBooks to accomplish these computations. A business using the percentage completed basis of revenue recognition had to determine this percentage by dividing the costs to date over the current estimate. The current estimate was defined as the original estimate plus any approved change orders.
Accounting guidelines recommended that Revenue Earned equal the Total Costs to Date divided by the Current Project Budget (Estimate) multiplied by the Current Customer Contract Sales Price. In reality this formal required computing the percentage complete on the project and applying the computed percentage against the contract sales price to determine the amount of revenue to record.
While the previously available Cost to Complete Summary report came close to meeting the needs of businesses using percentage of completed revenue recognition, it had several shortcomings. The new Job WIP Summary Report has overcome these shortcomings and provides a summary of job-related information including estimated and actual cost, the percent complete, and the estimated, earned, and actual revenue. The Earned Revenue column shows the amount you've earned for the job but haven't yet billed to the customer. The Actual Revenue column shows the amount you've previously billed to the customer.
Despite how beneficial this report is, there are a couple of irregularities associated with its’ design. First, the report will only provide accrual basis figures, it is not available on a cash basis. Second, if the “Actual Cost” exceeds the “Estimated Cost”, the reported percentage completed will be 100%.
Even with these limitations, the new report is superior to the old process of having to piece different QuickBooks reports together in Excel, and then apply percentage computations to achieve the same result as the information provided in the new report.
There is one other noted limitation of the new report, it is available only in QuickBooks Enterprise-14, and it cannot be found in either the Premier or Pro versions of QuickBooks.