A company has a contract to build a bridge for $100,000 with an estimated time to completion of three years. A reliable total cost estimate for the project would be $60,000. In the first year of the project, the company incurred a cost of $24,000.

(a) Assume that the contractor bases the degree of completion on the percentage of total costs incurred to date.

Under the percentage-of-completion method, what amount of gross profit the company will report in the first year?

(b) Under the completed contract method, what amount of gross profit the company will report in the first year?