A Limited enters with a customer a 3 year construction contract for 10,00,000. The estimated total costs are 37,00,000. In year 2, the management has to revise the estimated costs. The contract however remains profitable. The relevant figures are as under: Amount) Particulars Year 1 Year 2 Year 3 Estimated Revenue 10,00,000 10,00,000 10,00,000 Estimated total costs 6,00,000 8,50,000 8,50,000 Estimated total profits 4,00,000 1,50,000 1,50,000 Costs incurred till date 3,00,000 6,80,000 8,50,000 Percentage of completion (based on cost) 50% 80% 100% Cumulative recognised profits (Estimated revenue x percentage completion - costs incurred till date) 2,00,000 1,20,000 1.50,000 Recognised profit for the year 2.00.000 (80,000) 30,000