Backwater Construction Company is reviewing a major contract which is in serious difficulty. The contract price is €10,000,000. The project involves the construction of four buildings of equal size and complexity. The first building has been completed and costs to date are €3,000,000. The second building is expected to be completed after one more year, the third building after two years and the final building after three years. The relevant discount rate is 10% p.a.
Required:
Prepare the entries to record the revenue for the year just completed, to record the expenses incurred, and adjust assets (if any) and liabilities (if any) at the balance date.