XYZ signs a contract on 30 June 2015, agreeing to build a bridge for ABC at a contract price of $40 million. XYZ estimates that construction costs will be as follows:

___________________________________________________

Year Ending Cost

___________________________________________________

30 June 2016 $10 000 000

30 June 2017 $16 000 000

30 June 2018 $ 6 000 000

$32 000 000

The contract provides that ABC will make payments on 30 June of each year as follows:

2016 $8 000 000

2017 $20 000 000

2018 $12 000 000

$40 000 000

XYZ now estimates at the beginning of the 2017 financial year that construction costs will be as follows:

_________________________________________________

Year Ending Cost

___________________________________________________

30 June 2016 $10 000 000

30 June 2017 $21 000 000

30 June 2018 $15 000 000

$46 000 000

Required:

Calculate:

Percentage of completion for each of the three years. (3 marks)

Revenue to be recognised in each of the three years. (3 marks)

Gross profit recognised in each year. (1.5 marks)