Queensbridge Corp. started a contract in June 2020 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2022 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2020 and 2021 were $7 million and $24 million, respectively. Because of cost overruns in 2021, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.
Required:
Determine the amount of gross profit to be recognized for the years ended December 31, 2020 and December 31, 2021.

Question

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The Answer of Queensbridge Corp. started a contract in June 2020 to build a bridge at a fixed price of $45 million. The bridge was to be completed by October 2022 at a total estimated cost of $35 million. Total cumulative costs incurred by the end of December 2020 and 2021 were $7 million and $24 million, respectively. Because of cost overruns in 2021, it is now expected that the project will cost $5,000,000 more than originally estimated. Final costs at the end of the project totaled $36 million. Queensbridge Corp. follows the guidance in IFRS.
Required:
Determine the amount of gross profit to be recognized for the years ended December 31, 2020 and December 31, 2021.