Russell Ltd Commenced the Construction of a Bridge on 1July

question 27

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. What is the gross profit to be recognised in each of the 3 years (rounded to the nearest $000) ?

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Definitions:

Regression Equation

The equation that describes how the mean or expected value of the dependent variable is related to the independent variable; in simple linear regression, E(y) = b0 + b1x.

Estimated Income

The projection or approximation of income over a specified future period, often based on historical data and current trends.

Estimated Regression Equation

An equation derived from regression analysis that predicts the dependent variable based on the independent variables.

Yearly Income

The total amount of money earned by an individual or entity in one year from all sources.