Asahi Technology has a contract to build a network for a customer for a total sales price of euro 10 million. The network will take an estimated three years to build, and total building costs are estimate to be euro 6 million. Asahi recognizes long-term contract revenue using the percentage-of-completion method and estimates percentage complete based on expenditure incurred as a percentage of total estimated expenditures.
At the end of Year 1, the company had spent euro 3 million. Total costs to complete are estimated to be another euro 3 million.
At the end of Year 2, the company had spent an additional euro 2 million for an accumulated total of euro 5 million. Total costs to complete are estimated to be another euro 1.25 million.
At the end of Year 3, the contract is complete. The company spent an accumulated total of euro 6.4 million.
How much revenue will Asahi recognize in Year2?