Assume the following facts for a construction contract that was completed over four years. The contract price is S5.5 million.

Required:
a. Using die percentage of completion method, compute the gross profit or loss to be recognized as a result of this contract for each of the four years. The company used the cost-to-cost method to estimate the percentage complete.
b. If this company was permitted to use guidance in ASPE, and the company chose to apply the completed contract method, what would be die gross profit or loss in each of the four years?

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2011 2012 2013 2014 Cost incurred to date $1,000,000 S2,000,000 S3,000,000 S4,000,000 Estimated costs to complere 2,500,000 4,000,000 2,000,000