Problem:
A construction company entered into a fixed-price contract to build an office building for $40 million. Construction costs incurred during the first year were $12 million and estimated costs to complete at the end of the year were $18 million. During the first year the company billed its customer $13 million, of which $7 million was collected before year-end.
Required:
Question: What would appear in the year-end balance sheet related to this contract using Percentage-of-completion method?
Note: Show all workings.