If there is a project will be implemented through 2 phases. Also it is a loss makiing contrat.

Soppose, budget cost is 120, while budget revenue is 100. So at the beginning, we provide loss contract provision 20.

In phase 1, it make a big loss 30, the budget will be unchanged, for in phase 2, it will make profit 10.

My question is that whether the balance of loss contract provision should be 10 on debit side (20-30)? But it seems not so reasonable, debit side provision, means the provision will be cover by futrue performance? It is not prudent for accounting.

How about the balance of provision will be zero. That means in phase 1, the final loss will 10. But if the budget will not changed, the profit will be zero in phase 1&2. That menas average margin.

Hope someone can help me to calrify it, thank you.