Indiana Co. began a construction project in 2006 that will provide it $150 million when it is completed in 2008. During 2006, Indiana incurred $36 million of costs and estimates an additional $84 million of costs to complete the project.
In 2007, Indiana incurred costs of $58.5 million and estimated an additional $40.5 million in costs to complete the project. Using the percentage-of-completion method, Indiana:
a) Recognized $15 million gross profit on the project in 2007.
b) Recognized $13.5 million gross profit on the project in 2007.
c) Recognized $6 million gross profit on the project in 2007.
d) Recognized $1.5 million gross profit on the project in 2007.