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.

  1. Taxes

    An involuntary fee levied on corporations or individuals that ...
  2. Revenue

    The amount of money that a company actually receives during a ...
  3. Accounting

    The systematic and comprehensive recording of financial transactions ...
  4. Expense

    1. The economic costs that a business incurs through its operations ...
  5. Accrual Accounting

    Accrual accounting is an accounting method that measures the ...
  6. Percentage Change

    Percentage change is a simple mathematical concept that represents ...
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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. Can working capital be depreciated?

    Working capital as current assets cannot be depreciated the way long-term, fixed assets are. In accounting, depreciation ... Read Full Answer >>
  4. Do working capital funds expire?

    While working capital funds do not expire, the working capital figure does change over time. This is because it is calculated ... Read Full Answer >>
  5. How much working capital does a small business need?

    The amount of working capital a small business needs to run smoothly depends largely on the type of business, its operating ... Read Full Answer >>
  6. What does high working capital say about a company's financial prospects?

    If a company has high working capital, it has more than enough liquid funds to meet its short-term obligations. Working capital, ... Read Full Answer >>

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