Otis Construction Company (OCC) has entered into a contract with total expected revenue of $10 million. OCC expects that total costs will be $8,750,000. Below are the costs, billings and cash collections for the three years of the contract.

	Year 1	Year 2	Year 3
cost this year	1,500,000	6,000,000	1,250,000
billing this year	1,200,000	5,800,000	3,000,000
cash collected this year	1,000,000	4,500,000	4,000,000

Based on surveys of the stage of completion, it was determined the contract was 10% complete in year 1, 85% complete in year 2 and was 100% complete in year 3. Prepare all necessary journal entries for the three years under the following four scenarios. Use construction in progress (CIP) as a clearing account for your journal entries. Also provide the balances of the various accounts that will be reported on the financial statements each year.

1. The company reports using IFRS and meets the criteria necessary to use the percentage-ofcompletion method.

2. The company reports using US GAAP and meets the criteria necessary to use the percentage-ofcompletion method. OCC uses the gross-profit approach.

3. The company reports using US GAAP and does not meet the criteria to use the percentage-ofcompletion method.

4. The company reports using IFRS and does not meet the criteria to use the percentage-ofcompletion method. It is not able to reliably estimate its revenue until the final year of the contract.