Anker Corp. is building an office building under a long-term contract. The total construction contract price is $40 million. Anker estimates that its costs will total $32 million. The contract is expected to take three years to complete.

A. In the first year, costs are $8 million. Anker estimates that the job is about 25% done. What gross profit will it recognize under:

a. The percentage of completion method?

b. The completed contract method?
B. In the second year, costs are $16 million. Anker estimates that the job is now 75% done. Anker continues to believe the total cost of the job will be $32 million. What gross profit will it recognize under:

a. The percentage of completion method?

b. The completed contract method?
C. In the third year, costs are $8 million, and the contract is completed.
What gross profit will Anker recognize under:

a. The percentage of completion method?

b. The completed contract method?
D. What are total gross profits under the two methods?