A construction company accepted a contract to build a bridge for $ 7,000,000. Construction activity began early in Year 1 and was concluded during Year 3. Information pertaining to the construction was as follows:

Costs As of Year-End Billings Collections Incurred Estimated Costs To During During Year DURING YEAR Complete Construction Year Year 1 $1,000,000 $3,000,000 $1,750,000 $1,500,000 2 2,000,000 2,000,000 2,450,000 2,000,000 3 3,000,000 -0- 2,800,000 3,500,000 Totals 6,000,000 7,000,000 7,000,000 The amount of REVENUE and GROSS PROFIT OR (LOSS) or (loss) to be recognized under the Completed Contract method in Year 3 are:

Group of answer choices

Revenue recognized of $2,800,000 and Gross Profit recognized of $400,000.

Revenue recognized of $7,000,000 and Gross Profit recognized of $1,000,000.

Revenue recognized of $3,500,000 and Gross Profit recognized of $1,000,000.

Revenue recognized of $3,500,000 and Gross Profit recognized of $500,000.