Building America's Roads and Buildings General Overview | Firm Experience Accounting for construction companies, like any other industry has become more complex. In the past, construction companies would report their income to the government using the completed contract method of accounting. This meant that no income was recognized on a job until it was completed. The Government recognized that under the completed contract method of accounting, tax revenue could be deferred for many years. As a result, they devised a new method of recording income on long–term contracts. This method called Percentage of Completion, recognizes income on long–term contracts as a percentage of total cost incurred to date over estimated contract costs. This method allows the Government to receive tax revenue over the life of the contract. Upon completion of certain long–term contracts, the company must perform a "look–back" calculation to justify its tax liability reported in prior years. ©2010 Schultheis & Panettieri LLP, All Rights reserved.