COMPLETED CONTRACT METHOD CCM

An accounting method that enables a taxpayer or business to postpone the reporting of income and expenses until a contract is completed. This accounting method is used frequently in the construction industry or other industries whose businesses involve long-term contracts.

This type of contract has benefits and disadvantages for a firm's balance sheet. On the one hand, because revenue recognition is postponed, tax liabilities are also postponed. However, this type of accounting method causes fluctuations within the balance sheet, which is often taken as a sign of risk and business inconsistency.