MacNeil Construction Company has a long-term construction contract to build a shopping centre. The centre has a total estimated cost of $120 million, and a contract price of $152 million. Additional information follows:

The shopping centre is completed in 2015 as scheduled. All cash collections for the contract have been received.
Instructions
Prepare a schedule to determine the revenue, expense, and gross profit for each year of the long-term construction contract, using the percentage-of-completion method.
Taking It Further
Assume that late in 2012, MacNeil Construction discovered that it made a mistake when preparing the bid for the contract. The estimated costs used in the proposed bid were understated by such a large amount that MacNeil is now unsure that it will make any profit on the job, because the total costs cannot be readily determined. Is it still appropriate to use the percentage-of-completion method for the remaining years of the contract? Explain.

Cash Collections Actual Costs Incurred Year 2012 2013 2014 2015 s32,000,000 24,000,000 46,000,000 50,000,000 $152,000,000 $ 24,000,000 18,000,000 30,000,000 48,000,000 $120,000,000