On 17 February 2002 Flagstaff Development Limited signed a contract with its client in Hamilton to...

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On 17 February 2002 Flagstaff Development Limited signed a contract with its client in Hamilton to construct a 7-storey office building in Gordonton. The contract scheduled to be completed on 30 August 2004 has a fixed contract price of $25 million without any price escalation clause. The building team of Flagstaff Development Limited made a preliminary estimate of $20 for the cost of the construction contract. The outcome of the construction contract can be reliably estimated and following details relates to the project: Details Costs incurred for the year Estimated costs to complete Progress billings during the year Cash collected during the year 2002 ($ million) 6 14 7 6 2003 ($ million) 9 00 8 11 10 2004 ($ million) 8 7 7 The company's financial year end is 31 December. Required: Prepare an extract of the balance sheet as at 31/12/2002, 31/12/2003 and 31/12/2004 showing items related to the construction contract that are required to be disclosed in the face of the position statement in accordance with Generally Accepted Accounting Practices (GAAP). On 17 February 2002 Flagstaff Development Limited signed a contract with its client in Hamilton to construct a 7-storey office building in Gordonton. The contract scheduled to be completed on 30 August 2004 has a fixed contract price of $25 million without any price escalation clause. The building team of Flagstaff Development Limited made a preliminary estimate of $20 for the cost of the construction contract. The outcome of the construction contract can be reliably estimated and following details relates to the project: Details Costs incurred for the year Estimated costs to complete Progress billings during the year Cash collected during the year 2002 ($ million) 6 14 7 6 2003 ($ million) 9 00 8 11 10 2004 ($ million) 8 7 7 The company's financial year end is 31 December. Required: Prepare an extract of the balance sheet as at 31/12/2002, 31/12/2003 and 31/12/2004 showing items related to the construction contract that are required to be disclosed in the face of the position statement in accordance with Generally Accepted Accounting Practices (GAAP).

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