In general, if the total estimated contract costs (burdened with Fringe and Overhead rates) exceed the contract value, the loss would need to be calculated and taken immediately. Below is an example entry for forward loss provisions:
Entry to Record:
Debit Contract Costs
Credit Forward Loss Provision (Liability)
As the contract continues and the costs are incurred:
Debit Forward Loss Provision until balance is zero
Credit Contract Costs