Classical Ltd. Began work in 2020 on a contract for $ 1,250,000. Other data are:

2020 2021

Costs incurred to date...................................................................... $ 540,000 $ 875,000

Estimated costs to complete as of December 31................. 360,000 100,000

Billings to date..................................................................................... 420,000 950,000

Collections to date............................................................................. 300,000 700,000

Classical uses the percentage-of-completion method. Gross profit recognized in 2020 was $210,000 (Revenue $750,000; expense $540,000). The 2020 opening balance on LT Contract Asset/Liab is $330,000 DR.

Required:

(a) Calculate gross profit to be recognized in 2021.

(b) What amounts will be reported on the Statement of Financial Position in 2021?

(c) If the estimated costs to complete were $300,000 at the end of 2021, how would your response to part (a) change?