Assume that General Electric Company agreed in May 2008 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of \(\$ 500\) million is to be paid as follows: \(\$ 200\) million at the time of signing; \(\$ 100\) million on December 31,2008 ; and \(\$ 200\) million at completion in May 2009. General Electric incurred the following costs in constructing the generator: \(\$ 100\) million in 2008 , and \(\$ 300\) million in 2009 .

a. Compute the amount of General Electric's revenue, expense, and income for both 2008 and 2009 under the percentage-of-completion revenue recognition method.

b. Discuss whether or not you believe the percentage-of-completion method provides a good measure of General Electric's performance under the contract.