Measure Harbor's fabrication progress

Harbor is building a customer-specific processing unit. The contract prevents Harbor from redirecting the unit to another customer, and substantial rework would be needed to use it elsewhere. If the customer cancels for a reason other than Harbor's failure to perform, the contract and applicable law entitle Harbor to payment for work completed. That payment includes a reasonable margin.

These supplied facts support the third path in ASC 606-10-25-27: the asset has no alternative use. Harbor also has an enforceable right to payment for performance completed to date. Cost incurred does not establish either condition.

For the supplied cost-to-cost method, the allocated price is $500,000. Expected eligible costs are $400,000, and eligible costs incurred to date are $100,000. Harbor recognized $90,000 of cumulative revenue before this reporting period.

Cumulative progress = $100,000 ÷ $400,000 = 25.0%
Cumulative revenue  = $500,000 × 25.0% = $125,000
Current revenue     = $125,000 − $90,000 = $35,000
Remaining revenue   = $500,000 − $125,000 = $375,000

The cumulative amount replaces the prior cumulative estimate for this reporting date. Subtracting the amount recognized before the period isolates the current-period effect. Remaining allocated revenue is a reconciliation; it is not proof of future cash collection.

The calculation depends on the supplied method and eligible-cost population. If waste or an input disproportionate to performance were included, Harbor would first remove or adjust it under ASC 606-10-55-21. If no over-time criterion applied, this percentage would not authorize revenue.

Now complete the independent Summit practice.