A Shipyard Contracted with a Foreign Government to Build a Small

A shipyard contracted with a foreign government to build a small naval vessel. The contract calls for the foreign government to pay the shipyard $10,000,000 upon the completion and delivery of the vessel in 2008. The shipyard engineers estimated the costs to complete the vessel at $8,200,000. Under each of the situations that follow, show the income that would have to be reported assuming the percentage-of-completion method is used to recognize income. Show your computations.
a. Income to be reported in 2006, assuming $2,000,000 has been spent and the engineers estimate an additional $6,800,000 will be spent to complete the vessel. 2001 income that should be reported is (pick one below):
$280,000
$272,727
$1,200,000
Computations:
b. Income to be reported in 2007, assuming $6,000,000 has already been spent and the engineers estimate an additional $3,4000,000 will be spent to complete the vessel. 2007 income is (pick one below):
$110,252
$382,978
$548,936
Computations:
c. Income to be reported in 2008, assuming $8,800,000 has already been spent to complete and deliver the vessel to the foreign government, which immediately paid their bill. 2008 income is (pick one below):
$961,022
$777,332
$600,000
$1,200,000
$817,021
Computations: