It's done on a CompuTrainer. This is a copy/paste from the results sent to me by my coach:
Originally Posted by Racer Ex
• On a trainer, warm-up easy for 15 minutes;
• Over the next 5 minutes, do five (5) hard 30-second efforts, followed by 30 seconds of soft-pedaling. The purpose of this drill is to open up the blood and oxygen flow and to increase the heart rate prior to the 20-minute effort, so don’t go too hard. Push a wattage you think you can sustain for 10 to 20 minutes.
• Pedal easy for 5-minutes and prepare yourself mentally for the 20-minute test, as it’s going to hurt!
• Start the 20-minute test by selecting a wattage/intensity you think you can sustain for the full-20 minutes. The cardinal rule of time trialing applies here: don’t start out too hard. Keep in mind that the best cyclists in the world can only sustain 400-500 watts over a 1-hour period of time, so if you find yourself starting out at 500 watts, you know you are likely going much too hard. It’s best to start out easy for the first two minutes, and then build progressively to a wattage/intensity level you think can sustain.
• Hold that level for the first 15 minutes, and then give it your best effort during the final five minutes. (If you find yourself fading in the last five minutes instead of holding steady or building, then you may have gone out too hard. Keep this in mind for your next test).
• Take your average wattage for the 20-minute period of time and multiply by .95.
• Your functional threshold power = 20-minute CP test x .95
The power and hear rate zones are calculated using percentages developed by Dr. Andrew Coggan
Heart rates are also taken every 5 minutes.
The results are distributed showing FTP, and the various power and heart rate zones.