How to Accrue Revenue for Extension of Time (EOT) Prolongation Claims
Accruing the additional prolongation costs associated with an extension of time granted by the client.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Claims Receivable (Prolongation) | Asset (+) | 95,000.00 | - |
| Contract Revenue (Prolongation Claim) | Revenue (+) | - | 95,000.00 |
💡 Accountant's Note
When a contractor is granted an EOT due to employer-risk events, they are entitled to prolongation costs (site overhead for the extended period). Revenue is recognized when it is highly probable of recovery.
Practitioner & Systems Framework
💻 ERP Architecture
Do not adjust the base contract value. Track the EOT revenue in a distinct claims ledger. Only post the accrual once the Engineer/Client has formally accepted the time extension and cost impact.
⚠️ Audit Flags
IFRS 15 variable consideration. An EOT grants time, but not necessarily money. Auditors heavily scrutinize the leap from 'we got an EOT' to 'we are accruing prolongation costs'. Evidence of financial agreement is required.
📄 Required Documentation
Client/Engineer letter granting the EOT with financial compensation, detailed prolongation cost breakdown, and legal review.
Automate this entry with the JEH Accounting Suite
Stop doing manual entry. Our VBA-powered ERP automatically generates your ledgers, Trial Balance, and Financial Statements.
No Subscriptions. Own your data.
Expert Analysis by Qusai Ahmad
General Accountant Supervisor & IFRS Specialist
Specialized in SAP GUI automation and Middle Eastern tax compliance. Building digital tools for the next generation of finance leaders.