ERP-WIP

Work in process (WIP)If a job runs over a long period, you may want to transfer these costs to a Work In Process (WIP) account on the balance sheet while the job is being completed. You can then recognize the costs and sales in your income statement accounts when it  is appropriate. You can calculate the value of the WIP of your jobs.  The calculation is based on the WIP method selected on individual jobs.

• Cost value: It starts by calculating the value of what has been provided by taking a proportion of the estimated total costs, based on the percentage of completion. Invoiced costs are subtracted by taking a proportion of the estimated total costs, based on the invoiced percentage.

• Cost of sales: It begins by calculating the recognized costs. Costs are recognized proportionally based on scheduled total costs.

• Sales value: It recognizes revenue proportionally based on the usage total costs and the expected cost recovery ratio.

• Percentage of completion: It recognizes revenue proportionally based on the percentage of completion, that is, the usage total costs against schedule costs.

• Completed contract: Completed contract does not recognize revenue and costs until the job is complete. You may want to do this when there is high uncertainty about the estimates of costs and revenue for the job.The system also allows you to create your own job WIP method that reÁects the needs of your organization.