How to Record CPFF Fixed Fee Revenue
Accruing the fixed fee portion of revenue on a Cost Plus Fixed Fee (CPFF) contract based on performance progress.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Unbilled Receivables - Fee | Asset | 2,500.00 | - |
| Contract Revenue - Fixed Fee | Revenue | - | 2,500.00 |
💡 Accountant's Note
Under CPFF contracts, the fee is a fixed dollar amount. Revenue is recognized as the work progresses, typically in proportion to the costs incurred relative to the total estimated costs.
Practitioner & Systems Framework
💻 ERP Architecture
Set up a revenue formula in the project accounting module that calculates (Costs Incurred / Total Est. Costs) * Total Fixed Fee.
⚠️ Audit Flags
Recognition of fee in excess of the contract's fixed fee ceiling or percentage of completion mismatch.
📄 Required Documentation
Contract award showing fixed fee amount and monthly cost reports.
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Related Journal Entries
Defense, Aerospace & Government Contracting
Cost-Plus-Fixed-Fee (CPFF) Contract — Revenue Recognition as Costs Are Incurred
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Firm Fixed-Price (FFP) Contract — Cost-to-Cost Percentage of Completion Revenue
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Time & Materials (T&M) Contract — Revenue at Contractual Labor Rates Plus Material Cost
Discussion & Community Questions
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