Construction Limited began a long-term construction contract on January 1, 2016. It decided to use the percentage-of-completion method (based on costs) to account for the contract. Relevant cost information is shown below:

Year-end Costs this year Costs to complete Contract value

2016: 1,200,000 3,800,000 6,000,000

2017: 1,600,000 2,400,000 6,200,000

2018: 2,000,000 500,000 6,300,000

During 2018 (before year-end), due to significant uncertainty about the projects completion, the companys accountant decides to change from the percentage-of-completion method to the completed contract method. The applicable tax rate is 30%.

Prepare all necessary journal entries for each year.