Computing Revenue and Gross Prot on Long-term Construction Contract Supplier Corp. enters into a government contract during the year to provide computer equipment for $3,600,000. The contract consists of a single performance obligation to provide specified equipment in three years. Total costs estimated by Supplier Corp. for the contract are $2,520,000. The equipment is highly specialized and has no alternative uses. As negotiated in the contract, any costs incurred by Supplier Corp. plus a specified profit margin will be paid to Supplier Corp. in the event of a contract cancellation. Actual costs incurred during the first year of the contract were $1,152,000 including unexpected cost overruns of $144,000 due to labor inefficiencies. Assume that at the end of the second year of the contract, the estimate of total costs has increased to $2,700,000 million due to an increase in cost of materials. Actual costs incurred to date are $2,025,000, excluding year one inefficiencies. a. Calculate (1) recognized revenue, (2) the gross profit, and (3) adjusted contract margin to be recorded in the second year of the contract.

1	Recognized revenue	Answer
2	Gross profit	Answer
3	Adjusted contract margin	Answer

b. Calculate (1) cumulative recognized revenue, (2) cumulative gross profit, and (3) cumulative adjusted contract margin at the end of the second year of the contract.

1	Cumulative recognized revenue	Answer
2	Cumulative gross profit	Answer
3	Cumulative adjusted contract margin	Answer