Circumspect Construction, an IFRS company, committed to a contract which involves building an overpass for...
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Circumspect Construction, an IFRS company, committed to a contract which involves building an overpass for $42 million dollars for the Provincial Transit Authority. The project began in 2019 and is expected to be completed in 2021. The following data is available for the construction period 2019 2020 $11,700,000 Costs for the year $14,820,000 Estimated cost to complete Progress billings for the year Cash collected for the year 17,000,000 18,300,000 8,480,000 15,000,000 15,000,000 8,000,000 a) What is the gross profit for each of the two years? b) In 2020, construction supply costs went up considerably because of reduced production due to the Covid isolation protocol. Assume that instead of completion costs being estimated at $8,480,000, Circumspect's management is unsure if they can estimate the expense of finishing the project. What accounting method would you recommend they follow and how much revenue should they recognize in this uncertain year of 2020
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