On 1^st March 20X9, Glenelg Ltd entered into an agreement with its customer, Cleland Ltd, to develop a new e-farming system. The agreement states that the total consideration for the system is $1,000,000. Total costs for developing the system were estimated to be $800,000.

At 30 June 20X9, the end of its reporting period, Glenelg Ltd had incurred the following costs in relation to the agreement with Cleland Ltd:

Total labour costs of $150,000, of which $50,000 was an advance payment to a subcontractor who had not performed their work on the project as at 30 June 20X9.

Total incurred materials costs of $460,000 includes:

• Materials wasted $8,000.
• Purchase of supplies of $16,000, of which 50% remains on hand for the future development of the system. The other half of the supplies were used in the development of the system to its current stage.
• Amounts relating to a performance obligation that is not yet satisfied $300,000.

As at 30 June 20X9, Cleland Ltd had made progress payments to Glenelg Ltd of $300,000. Glenelg Ltd calculates the measurement of progress using input methods in accordance with paragraph B18 of AASB 15/IFRS 15.

Required: (Please label your responses as 1), 2), 3).)

1) Calculate the revenue to be recognised from the contract by Glenelg Ltd for the year ended 30^th June 20X9. Workings are needed. (6/10)

2) Prepare the journal entries to record the revenue generated for the year ended 30^th June 20X9. (1/10)

3) Explain whether the $8,000 of wasted materials can be capitalised as an asset. (3/10)