Completed Contract Method - CCM


DEFINITION of 'Completed Contract Method - CCM'

An accounting method that enables a taxpayer or business to postpone the reporting of income and expenses until a contract is completed. This accounting method is used frequently in the construction industry or other industries whose businesses involve long-term contracts.

BREAKING DOWN 'Completed Contract Method - CCM'

This type of contract has benefits and disadvantages for a firm's balance sheet. On the one hand, because revenue recognition is postponed, tax liabilities are also postponed. However, this type of accounting method causes fluctuations within the balance sheet, which is often taken as a sign of risk and business inconsistency.

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  1. How is deferred revenue treated under accrual accounting?

    In accrual accounting, deferred revenue, or unearned revenue, represents a liability on the balance sheet recorded on funds ... Read Full Answer >>
  2. What are the differences between percentage of completion and the completed contract ...

    Each business is required to choose an accounting method to report income and expenses. It is important to fully understand ... Read Full Answer >>
  3. Does working capital measure liquidity?

    Working capital is a commonly used metric, not only for a company’s liquidity but also for its operational efficiency and ... Read Full Answer >>
  4. Can working capital be negative?

    Working capital can be negative if a company's current assets are less than its current liabilities. Working capital is calculated ... Read Full Answer >>
  5. How do I read and analyze an income statement?

    The income statement, also known as the profit and loss (P&L) statement, is the financial statement that depicts the ... Read Full Answer >>
  6. Does working capital include prepaid expenses?

    The calculation for working capital includes any prepaid expenses that are due within one year, since such prepaid expenses ... Read Full Answer >>

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