On January 1 2019 Areej entered into a contract with a customer to construct a stadium for consideration of $ 200 million. The contract was expected to take 2 years to complete. At 31 December 2019 Areej had incurred costs of $ 55 million, Costs to complete are estimated at $ 50 million. In addition to these costs, Amir purchased plant to be used on the contract at a cost of $ 30 million. This plant was purchased on 1 January 2019 and will have a residual value of $ 10 million the end of 2-year contract. Depreciation on the plant is to be allocated using a straight line method.

Areej determines the progress on contracts with an output method, based on the value of work certified to date. At 31 December 2019, the value of the work certified was $ 110 million, and the payment received from the was $ 20 million.

Required:

1. How should this transaction be accounted for in the year ended 31 December 2019?

2. When do we know that a performance obligation is satisfied, according to IFRS 15? Explain comprehensively and write 15 to 20 lines.

3. Describe briefly the two methods used to determine the progress of a contract. Dont write more than 8 lines.

4. List 6 types of direct costs and three types of indirect costs for a contract. Moreover, explain the difference between these direct and indirect costs. Dont write more than 6 lines.