Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions): Year Cash Collections Cost Incurred 2012 2013 2014 Total $ 30 $30 50 40 35 $ 120 20 $ 85 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number. Enter $ answers in millions. Costs incurred Cost-to-Cost Method Percent of total expected Revenue Year costs recognized Income 2012 $ 2013 2014 x % * $ * $ x % * x x x % * $85 $120 $35 (b) Which of the following statements best summarizes our conclusion about the usefulness of the cost-to-cost method for this company? OThe cost-to-cost method is not useful because it does not provide information about the total revenues over the life of the project. The cost-to-cost method is an acceptable method under GAAP for contracts spanning more than one accounting period. OThe cost-to-cost method does not provide a good estimate of the revenue and income earned in each period. C