Professional Services
WIP Write-Down — Irrecoverable Engagement Hours
Writing down WIP when hours worked cannot be billed because the engagement was terminated or the work product is rejected.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| WIP Write-Down Expense | Expense (+) | 5,500.00 | - |
| Unbilled Receivables / Contract Asset (WIP) | Asset (−) | - | 5,500.00 |
💡 Accountant's Note
When billed hours become uncollectable (client refuses to pay, scope dispute, or engagement terminated), the WIP is impaired. The write-down reverses previously recognized revenue. This is a key risk management issue for professional firms billing under T&M contracts.
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