In project management and accounting, Work in Progress (WIP) refers to the value of the work that has been started but not yet completed. Reversing WIP on fixed price projects can be achieved by following these steps:
> Identify the specific fixed price project in question and the WIP balance associated with it.
> Determine if the project is still in progress or if it has been completed.
> If the project is still in progress, review the work that has been completed to date and determine the percentage of completion based on the fixed price agreed upon in the contract.
> Adjust the WIP balance by recognizing the revenue and associated costs for the percentage of work completed.
> If the project has been completed, determine the actual cost of completing the project and compare it to the fixed price agreed upon in the contract.
> Adjust the WIP balance by recognizing any revenue or cost variances that may exist.
It is important to note that reversing WIP on fixed price projects requires careful analysis and accurate documentation to ensure the financial statements accurately reflect the progress and completion of the project.
