Question - Central Home Builders Corp. executes a construction contract for $4,500,000. The total estimated construction cost for the contract is $4,000,000. The company provides the following additional information:
|
Year 1
|
Year 2
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Year 3
|
|
Costs incurred to date
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$1,000,000
|
$2,000,000
|
$1,000,000
|
|
Progress billings during year
|
900,000
|
2,400,000
|
1,200,000
|
|
Cash collected during year
|
750,000
|
1,750,000
|
125,000
|
What is the revenue and gross profit that Central Home Builders should recognize, respectively, for Year 2 under the percentage-of-completion method?