Note: Again, follow calculations for 2000 yourselves. The above entries, including appropriate amounts, should be repeated. In the final year of the contract the asset (CIP) must be closed against its contra account (Billings in Progress). Their balances should equal each other:
Billings in Progress 4,500,000
Construction in Progress 4,500,000
*The CIP is inclusive of profit--no further recognition of gross profit at completion.