A company incurred the following costs in year 1 to fulfill a contract that is expected to take two years to complete:

• Equipment required to complete the contract: $150,000
• Salaries and wages incurred to satisfy contract requirements: $300,000
• Supplies and materials directly used: $20,000
• Allocation of supervisory salaries: $15,000
• Allocation of general administrative costs: $35,000

Other information:

The equipment was acquired for the contract, but will have other use to the company when the contract is complete. It is expected to have a ten-year useful life with no residual value. The revenue from the contract will be recorded at the end of two years, when control transfers (i.e., point in time).

How will the above costs be accounted for in year 1? Does the answer change if period of time criteria is met?