Gold Coast Ltd commences construction of a multipurpose water part on 1 July 20x2 for Brisbane Ltd. Gold Coast Ltd signs a fixed price contract for total revenues of $100 million. The project is expected to be completed by the end of 20x5 and Brisbane Ltd controls the asset throughout the period of construction. The expected cost as at the commencement of construction is $76 million. The estimated costs of a construction project might change throughout the project-in this example, they do change. The following data relates to the project (the financial years end on 30 June):

	20x3 ($m)		20x4 ($m)		20x5 ($m)
Costs for the year	20		36		24
Costs incurred to date	20		56		80
Estimated costs to complete	56		24		-
Progress billings during the year	24		40		36
Cash collected during the year	22		38		40

Required:

(a) Using the above data, compute the gross profit to be recognised for each of the three years 20x3, 20x4, 20x5, assuming that the outcome of the contract can be reliably estimated. (3 marks)

(b) Prepare the journal entries for the 20x3 financial year to recognise revenue on the assumption that the revenue shall be recognised across the life of the construction contract. (4 marks)

(c) Prepare the journal entries for the 20x3 financial year, assuming that the measure of progress on the contract cannot be reliably assessed. This is independent from question (b). (4 marks)