Stage of completion Sales Basis

Stage of completion Sales Bases

Stage of completion on sales bases is calculated work certified as proportion to the contract price. The work certified is normally calculated by a expert of the field.

Example of Stage of completion Sales Bases

XYZ Company undertook a contract to construct a dam.

Contract Price	$ 10 Million
Work Certified to date	$ 2 Million
Cost incurred to date	$ 3 million
Contract period	10 Years
Calculate the Stage of completion

Solution

Work Certified	$ 2 million
Contract Price	$ 10 million
Stage of completion ( 2 million/ 10 million)x 100	20%

The cost incurred to date is to be ignored because in sales based stage of completion work certified and contract price are two element which taken into account while calculating the stage of completion.