Axia Berhad is in the intermediate stage of a construction contract for the construction of a multiple

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Question:

Axia Berhad is in the intermediate stage of a construction contract for the construction of a multiple of the telecommunication towers in several places in Malaysia . The original details of the contract are:

Approximate duration of the contract 2 years
Date of commencement 1 January 2015
Total contract price RM 60,000,000
Estimated total cost RM 50,000,000

Total cost incurred at:
30 March 2015 RM 10,200,000
30 March 2016 RM 37,000,000

An independent surveyor certified the
value of the work in progress as follows:

30 March 2015 RM 12,000,000
30 March 2016 RM 45,000,000 (to date)
Progress Billings at 30 March 2016 RM 35,000,000

On 15 May 2015, the customer approved a variation resulting in an increase in contract revenue of RM12,000,000 and estimated additional contract costs of RM8,000,000. Costs incurred up to 30 March 2016 included an amount of RM1,100,000 which was for standard materials stored at the site, which would only be used in the following year.

Axia Berhad determines the stage of completion of the contract on the basis of cost-to-cost method.

Required:

a) Calculate the expected profit for this construction contract based on the estimated contract revenue and costs for the financial years ended 30 March 2015 and 2016.

b) Calculate the amount of contract revenue and expenses that should be recognized by Axia Berhad for the financial years ended 30 March 2015 and 2016.

c) Prepare the extract Statement of Financial Position extracts and related note to the accounts for Axia Berhad in respect of the contract for the year to 30 March 2016.