Constructing and Assessing Income Statements Using Percentage-of Completion On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collection and contract costs follow ($ millions):

Year	Cash Collections	Cost Incurred
2012	$ 30	$ 30
2013	50	35
2014	40	20
Total	$ 120	$ 85

(a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the percentage-of-completion revenue recognition 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.

Percentage of Completion Method
Year	Costs incurred	Percent of total expected costs	Revenue recognized	Income
2012	$Answer	Answer%	$Answer	$Answer
2013	Answer	Answer%	Answer	Answer
2014	Answer	Answer%	Answer	Answer
	$85		$120	$35

(b) Which of the following statements best summarizes our conclusion about the usefulness of the percentage-of-completion method for this company?

The percentage-of-completion method does provide a good estimate of the revenue and income earned in each period.

The percentage -of-completion method is not useful because it does not provide information about the total revenues over the life of the project.

The percentage-of-completion method is not useful because it is so dependent upon the completion estimate used by the company and can be easily manipulated.

The percentage-of-completion method is not an acceptable method under GAAP.