A construction company has a fixed price contract to build an office building for $25 million. Construction costs incurred in the first year were $6 million and the estimated remaining costs to complete the building in the following year were $9 million. The company recognizes and records revenue over time according to percentage of completion.

a) How much revenue will appear on the companys income statement in the first year of the contract? (show calculations)

b) How much gross profit will appear on the companys income statement in the first year of the contract? (show calculations)