When the work certified is more than 50 but less than 100 of the contract price the notional profit ...........

Costing - Phase (I & II) Methods of Costing

When the work certified is more than 50% but less than 100% of the contract price, the notional profit to be credited to Profit and Loss account will be equal to:

1/3^rd of Notional Profit x cash received/ Work certified

½ of Notional Profit x cash received/ Work certified

2/3^rd of Notional profit x cash received/ Work certified

100% of Notional Profit.

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Explanation:

If work certified is less than 25% of contract price, nothing is transferred to Profit and Loss Account
If work certified is 25% or more but less than 50% of contract price,

Amount transferred to Profit and Loss account=

Notional Profit x 1/3 x Cash Received/work certified.