Russell Ltd Commenced the Construction of a Bridge on 1July

question 22

Multiple Choice

Russell Ltd commenced the construction of a bridge on 1July 2003. It has a fixed-price contract for total revenues of $35million. The expected completion date is 30 June 2006. The expected total cost to Russell Ltd at the beginning of the project is $29 million. The following information relates only to the construction of the bridge:

Russell Ltd uses the percentage of completion method based on cost to account for its construction contracts. Assuming that 2004's entries have been made, what are the journal entries for the year ended 30June 2005 (rounded to the nearest $000) ?

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Definitions:

User Charges

Fees paid directly for the use of public goods or services by the individuals or entities that use them.

Administrative Costs

Expenses related to the general operations of a business, including salaries of non-sales personnel, office supplies, and administrative support services.

Enforcement Costs

The expenses associated with ensuring compliance with laws, regulations, and agreements, including monitoring and penalties.

Compliance Costs

Expenses that businesses incur to adhere to laws, regulations, and standards.