[15] Sudan Co. sells major household appliance service contracts for cash. The service contracts are for a 1-year, 2-year, or 3-year period. Cash receipts from contracts are credited to a contract liability. This account had a balance of $1,440,000 at December 31, Year 1, before yearend adjustment. Service contract costs are charged as incurred to the service contract expense account, which had a balance of $360,000 at December 31, Year 1. Outstanding service contracts at December 31, Year 1, expire as follows: During Year 2 $300,000 During Year 3 450,000 During Year 4 200,000 What amount should be reported as a contract liability in Sudan's December 31, Year 1, balance sheet? A. $1,080,000 B. $950,000 C. $590,000 D. $490,000