Late in Year 1, XYZ Company signs a contract to construct a bridge for the Florida Dept. of Transportation. The contract price is $42,000,000. The costs during the 3-year construction period are as follows:
Year 2: $10,000,000
Year 3: $15,000,000
Year 4: $5,000,000
If XYZ Company recognizes income under the percentage-of-completion method, how much income would they recognize on the bridge contract in Year 2?
Correct Answer: $4,000,000
Explanation:
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