Table of Contents

Chapter 1 - Overview of Project Accounting. 1

The Project 1

The Project Accountant 2

Chapter 2 - Project Pricing, Billing and Revenue. 6

Project Pricing Methodologies. 6

Cost Plus Pricing. 6

Fixed Fee Pricing. 7

Contractual Modifiers. 7

Progress Billings. 8

Project Revenue Recognition. 9

Output Methods. 9

Input Methods. 10

Change in Estimate. 11

Progress Measurement 11

Percentage of Completion Method. 11

Completed Contract Method. 13

Contract Modifications. 13

Treatment as Separate Contract 14

Treatment as Continuing Contract 14

Entitlement to Payment 16

Measurement of Progress Completion. 16

Chapter 3 - Project Costs. 19

Project Costs. 19

Direct Costs. 19

Overhead Costs. 20

Capitalized Interest 20

Costs to Obtain a Contract 20

Information Organization and Presentation. 21

Information Recordation. 23

Separate Spreadsheet 23

Separate General Ledger / Subledger Accounts. 23

Separate Accounting Module. 24

Information Collection. 24

Chapter 4 - Project Cost Management. 26

Progress Monitoring. 26

Cost Variance Reporting. 27

Change Order Management 27

Allowance Management 28

Contingency Management 28

Budget Accuracy. 28

The Sunk Cost Consideration. 28

Chapter 5 - Interest Capitalization. 31

Overview of Capitalized Interest 31

When to Capitalize Interest 31

The Interest Capitalization Period. 32

The Capitalization Rate. 34

Calculating Interest Capitalization. 35

Chapter 6 - Additional Project Accounting Topics. 38

Asset Impairment 38

Research and Development Costs. 39

Internal-Use Software. 40

Website Development Costs. 42

Chapter 7 - Project Controls. 44

Controls for Cost Plus Pricing Arrangements. 44

Controls for Fixed Fee Pricing Arrangements. 45

Controls for Internal Projects. 46

Chapter 8 - Project Measurements. 49

Cost Variance. 49

Net Present Value. 50

Breakeven Analysis. 52

Return on Assets. 53

Free Cash Flow.. 54

Answers to Chapter Questions. 56

Glossary. 64

Index. 65

 

Final Examination…………………………………………………………………………………………………...67