Revenue contracts recognition

Dear Tutor,

I am quite confused with revenue from contracts.

There seem to be two ways of workings to reach the contract asset or liability and dont know which one to use every time.

One working is

revenue recognised based on percentage certified to date
Less amounts invoiced to the customer to date equals contract asset or liability.

Second working is

Costs incurred to date
Recognised profits
Less Recognised losses
Less receivables amounts invoiced

Equals contract asset or liablity.

Which one is the right one ?

Thank you.