Problem
Gobble Gobble has entered into a contract beginning January 1, 2014, to build a theater. It has been estimated that the theater will cost $2,500,000 and will take 3 years to construct. The theater will be billed to the purchasing company at $3,000,000. The following data pertain to the construction period.
2014 2015 2016
Costs to date $800,000 $2,000,000 $2,580,000 Estimated costs to complete $1,700,000 $500,000 -0-
Progress billings to date $600,000 $1,750,000 $3,000,000 Cash collected to date $420,000 $1,600,000 $3,000,000
Using the completed-contract method, compute the estimated gross profit that would be recognized during each year of the construction period.