Doxton Company commences the construction of a museum on 1 July 2018. It signs a fixed-price contract for total revenue of $190 million. The project is expected to be completed by the end of June 2021. The expected cost at the commencement of construction was $170 million. The expected costs to complete the construction project can change throughout the project. The following data relates to the project:

2019 2020 2021

($M) ($M) ($M)

Costs for the year 50 60 50

Costs incurred to date 50 110 160

Estimated costs to complete 120 60 -

Progress billings during the year 40 80 70

Cash collected during the year 35 80 75

The contract is completed as expected on 30 June 2021. Poweron Construction Company uses the percentage-of-completion method to account for its construction contract.

REQUIRED

a. Compute the gross profit to be recognised for each of the three years.(6 marks)

b. Provide the journal entries for each year. Assume the stage of completioncanbe reliably determined. Exclude journal narrations.(6 marks)

c. Prepare the journal entries for each year assuming the stage of completion and the outcome of the construction contractcannotbe reliably estimated. Show the differences from b) only. Exclude journal narrations.(3 marks)