A Construction Company Entered into a Three-Year Contract to Erect

A construction company entered into a three-year contract to erect a building for a customer. Its original bid on the job was for $3,600,000 but this was revised upward in year 3 to $3,900,000 because the customer negotiated for some "extras" (modification in the original specifications). A cumulative history of costs incurred and cost expectations throughout the three years the contract was in progress is set out below. Give the income to be reported (a) using the percentage-of-completion method, and (b) using the completed contract method. $\begin{array} { | l | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } & \text { Year 3 } \\\hline \text { Expected revenues } & \$ 3,600,000 & \$ 3,600,000 & \$ 3,900,000 \\\hline \text { Actual costs (cumulative) } & 750,000 & 2,550,000 & 3,270,000 \\\hline \text { Expected future costs } & 2,250,000 & 525,000 & - 0 - \\\hline\end{array}$