1. Entity A is a construction company listed in Hong Kong.

   To maintain consistency, it always recognises progress based on work certified over total contract value. For a long-term contract, Entity A will satisfy the performance obligation over time.

   In the year to 30 June 2020, Entity A had recognised revenue of $15,000,000 and a profit of $3,750,000 in respect of this contract.

   The following information relates to one of its long-term contracts on 30 June 2021.

   • Contract price = $50,000,000
   • Costs incurred to date = $32,500,000
   • Estimated cost to complete = $5,200,000
   • Invoiced to customer = $30,000,000
   • Work certified to date = $42,500,000

   The end of the reporting period is 30 June.

   REQUIRED:

   What profit should appear in Entity As Statement of Profit or Loss as for the period ended 30 June 2021 in respect of this contract?

   ANSWER:

   Contract profit =