Emilia Inc. (Emilia) is a private company that offers large custom-made portrait painting services. Emilias policy is to require customers to pay a 20% down payment upon signing of the contract, and when the painted portrait is half-way done, the customer must pay an additional 30% of the contract price. Upon completion of the portrait the customer pays the remaining 50% of the contract price. On July 1, 2021, Justin T. placed an order for a portrait of himself taking a selfie with Greta Thunberg. The portrait is to be painted on a side of 30 stories Kinder Morgan head office building. The following events have occurred in relation to Justins order:

On July 1, 2021, Justin T. signed the contract with a total price of $1,000,000 and on that same day transferred the money for the down payment. Due to the very large size of the portrait, Emilia was not able to reliably estimate the total cost of completing the portrait until all the paint was purchased and the received volume purchase discounts would be processed. However, Emilia was able to estimate that 1,000 liters of paint would be needed to complete the portrait.

Between September 30, 2021 and December 31, 2021, Emilia used 150 liters of paint and incurred actual cost of $60,000.

During 2022, Emilia continued working on the portrait and used an additional 400 liters of paint incurring actual costs of $480,000. By December 31, 2022, Emilia completed more than half of the portrait and billed Justin T. accordingly.

On January 28, 2023, Justin T. wired the money to Emilia for the 2^nd installment.

Between January 1 and August 1, 2023 Emilia used another 450 litters of paint to complete the portrait and incurred actual costs of $320,000. The portrait was completed on August 2, 2023 and the next day the Justin T. settled the remaining balance.

Emilia uses the percentage of completion method to calculate revenue to be recognized in its financial statements and has year end of December 31. Number of paint liters will be used to estimate progress. The company follows ASPE.

Required:

a. What is the percentage of completion of the statue at the end of December 31, 2021? (2 marks)

b. What is the amount of revenue to be recognized in 2021? (1 mark)