Income recognition for a contractor. On October 15. Year I, Flanikin Construction Company contracted to build a shopping center at a contract price of $180 million. The schedule of expected and actual cash collections and contract costs is as follows:

X Year Cash Collections from Customers Estimated and Actual Cost Incurred 1 $ 36,000,000 2 45,000,000 3 45,000,000 4 54,000,000

$180,000,000

$ 12,000,000 36,000,000 48,000,000 24,000,000

$120,000,000

a. Calculate the amount of revenue, expense, and net income for each of the lour years under the following revenue recognition methods:

(1) Percentage-of-completion method

(2) Completed contract method

(3) Installment method

(4) Cost-recovery-first method

b. Which method do you believe provides the best measure of Flanikin Construction Company's performance under the contract? Why?