Alfa Ltd. enters into a 3 years contract, the costs and profit/loss details of which are:

Contract price $30 m

Estimated costs $21 m (when the contract was signed)

Estimated profit: $9 m

Details of the actual costs and estimated costs to complete the contract are:

Year ended 31 March

Year 1

($000)

Year 2

($000)

Year 3 ($000)

Construction costs in the year

2 940

16 635

12 000

Costs to date

2 940

19 575

31 575

Estimated costs to complete

18 060

12 000

--

Estimated total costs (costs to date + costs to complete)

21 000

31 575

31 575

Notes:

- At the end of year 1 the project is still profitable and profit can be recognised.

- At the end of year 2 the projects total costs exceed the contract price. There will be an overall loss on the contract which must be recognised in year 2.

Required:

Prepare the general ledger for construction in process/progress (CIP) account.