(1) Completion of Contract is up to 50% or more but Less than 90% In this case two-third of the notional profit reduced by proportion of cash received to work certified is transferred to Profit and Loss Account. The equation is 2/3 x Notional Profit Cash Received Work Certified (iv) Completion of Contract is up to 90% or more than 90%, i.e., it is nearing completion: In this case the profit to be taken to Profit and Loss Account is determined by determining the estimated profit and using anyone of the following formula: a. Estimated profit x Work Certified Contract price h2 OR b. Estimated profit * Work Certified/Contract price x Cash received/Work Certified Estimated profit X Cash Received/Contract Price c. Estimated Profit X Cost of work done to date/Estimated Total Cost d. Estimated Profit Cost of work done to date/Estimated Total Cost x Cash received/Work Certified e. Normal Profit Work Certified/Contract Price (B) Profits or Loss on Completed Contracts When a contract is completed, the overall profit or loss on the contract is transferred to the Profit and Loss Account. Illustration The following are the expenses on a contract which commences on 1st Jan. 2013 Particulars Amt Rs. Materials Purchased 1,00,000 Materials on hand 5,000 Direct Wages 1,50,000 Plant issued 50,000 Direct Expenses 80,000 The contract price was Rs. 15,00,000 and the same was duly received when the contract was completed in August 2013 Charge indirect expenses at 15% on wages. Provide Rs. 10,000 for depreciation on plant and prepare the contract account and the contractee's account