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<h1>Percentage of completion method governs income recognition for construction and service contracts; limited exceptions for short-duration and indeterminate services.</h1> Profits and gains from construction and service contracts are to be computed by the percentage of completion method in accordance with the notified accounting standards; contract revenue includes retention money and contract costs are not to be reduced by incidental income such as interest, dividends or capital gains. Exceptions: short-duration service contracts use the project completion method, and service contracts comprising an indeterminate number of acts over a period use the straight line method.