One of the two methods to measure progress to completion in IFRS 15 Revenue recognition over time. The other is output method.
Revenue is recognised on the basis of the entity’s efforts or inputs to date (for example, resources consumed, labour hours expended, costs incurred, time elapsed or machine hours used) relative to the total expected inputs to the satisfaction of that performance obligation. If the entity’s efforts or inputs are expended evenly throughout the performance period, it may be appropriate for the entity to recognise revenue on a straight-line basis. The use of these methods requires an entity to exclude from an input method the effects of any inputs that do not depict the entity’s performance in transferring control of goods or services to the customer.