Reference no: EM132771923

Balfour Beatty won the contract to build the Aquatics Centre for the 2020 Olympics. Assume the following about this long-term contract: The Olympic Development Authority agreed to pay Balfour Beatty £400 million for this construction, which is expected to be completed on Dec 31, 2019. Balfour Beatty estimates the total cost to be £240 million. The Olympic Development Authority will make the following cash payments to Balfour Beatty: £100 million in 2016, £100 million in 2017, £100 million in 2018, and £100 million in 2019. Balfour Beatty started to work on the contract on January 1, 2016 (first day of its 2016 fiscal year) and it incurred £80 million of actual costs in 2016 and £60 million of actual costs in 2017. Before Balfour Beatty recognized revenue for 2017, it revised its total cost estimate to £260 million, but the actual costs for 2018 and 2019 eventually amounted to £130 million. The contract was completed at the end of 2019 as scheduled. Balfour Beatty uses the percentage-of-completion method to recognize revenues from long-term contracts. Ignore taxes.

Problem 1: How much revenue can Balfour Beatty recognize from the Olympic Aquatics Centre contract in total?