Measure of progress

Measure progress only after a performance obligation qualifies for over-time recognition. The method must depict transfer of control and apply consistently to that obligation and similar obligations in similar circumstances. Remeasure progress at each reporting date. ASC 606-10-25-31 through 25-35 sets these controls.

Output methods use direct evidence of value transferred, such as units delivered, milestones, surveys, results achieved, or elapsed service. An output fails when it omits transferred work in process or other performance. The right-to-invoice practical expedient applies only when the invoiced amount corresponds directly with value delivered to date. See ASC 606-10-55-16 through 55-19.

Input methods use effort or resources consumed, such as eligible cost, labor hours, machine hours, or time. Exclude abnormal waste and other inputs that do not depict performance. A large input transferred before related service can require adjustment when its cost is disproportionate to progress. ASC 606-10-55-20 through 55-21 provides the input-method tests.

For a cumulative method:

cumulative revenue = allocated price × cumulative progress
current revenue = cumulative revenue − revenue recognized previously

An estimate revision changes the current cumulative result; it does not rewrite the contract history without an applicable correction requirement. If progress cannot be measured reasonably but incurred costs are expected to be recovered, revenue is limited to those costs until measurement becomes reasonable. This limit appears in ASC 606-10-25-36 through 25-37.

Work through Harbor's adjusted cost-to-cost schedule. Apply the method again in the Northstar progress task.