A method and a system for accurately reporting battery capacity that do not rely on a coulomb counter are disclosed herein. The method comprises the steps of determining if the battery is in a transition phase and determining the battery capacity based on a transition phase battery capacity model when the battery is in the transition phase. The transition phase occurs upon one of attachment of the battery to a power source and disconnection of the battery from the power source. The behaviour described by the transition phase battery capacity model approaches the behaviour of real transition phase battery capacity so as to minimize the error of the determined battery capacity. The method and system accurately report battery capacity during a transition phase from discharging to charging and a transition phase from charging to discharging.