1. Sun City Ltd commences construction of a multi purpose water park on 1 July 2022 for Pretoria Ltd. Sun City Ltd signs a fixed-price contract for total revenues of $50 million. The project is expected to be completed by the end of 2025 and Pretoria Ltd controls the asset throughout the period of construction. The expected cost as at the commencement of construction is $38 million. The estimated costs of a construction project might change throughout the project – in this example, they do change. The following data relates to the project (the financial years end on 30 June):

• Prepare the journal entries for the 2023 financial year, assuming that the measure of progress on the contract cannot be reliably assessed.
• Independently of the above three parts of this exercise, prepare the journal entries for the 2023 and 2024 financial years, assuming that the revised costing data, as shown below, indicates that, overall, the contract will make a loss of $2 million. The revision is due to the fact that, during the year ending 30 June 2024, it becomes apparent that the creation of the water park has damaged the local ecosystem and the damage must be rectified immediately at Sun City Ltd’s expense.
  

  Particulars	2024 ($m)
  Costs for the year	18
  Total costs incurred to date	28
  Estimated costs to complete	24
  Progress billings during the year	20
  Cash collected during the year	19