Reference no: EM132684966

Emu Ltd was contracted to build a new apartment block for Kangaroo Ltd for $36,000,000. Payment of three $12,000,000 instalments were due and paid on June 30 of each year. The expected and actual costs at the end of each year are detailed as follows:

Year            Expected                  Actual

2020             8,000,000           8,000,000
2021        13,000,000               15,000,000
2022             10,000,000             10,000,000
Total             31,000,000              33,000,000

Note: The outcome the project can be measured reliably.

Required:

Question 1: Calculate the percentage completion using the cost method at the end of each year (use percentages of 2 decimal places).

Question 2: Calculate the gross profit (loss) and the revenue to be recognised each year (round to the nearest dollar) using the cost method.

Question 3: Prepare the appropriate journal entries for year 2020 only.