Curtiss Construction Company, Incorporated, entered into a fixed-price contract with Axelrod Associates on July 1, 2024, to construct a four-story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,540,000. The building was completed on December 31, 2026. Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows:

	At 12-31-2024	At 12-31-2025	At 12-31-2026
Percentage of completion	10%	60%	100%
Costs incurred to date	$ 368,000	$ 2,898,000	$ 4,889,000
Estimated costs to complete	3,312,000	1,932,000	0
Billings to Axelrod, to date	729,000	2,350,000	4,540,000

Required:

1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue recognition over time.
2. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute gross profit or loss to be recognized in each of the three years.
3. Assuming Curtiss recognizes revenue over time according to percentage of completion, compute the amount to be shown in the balance sheet at the end of 2024 and 2025 as either cost in excess of billings or billings in excess of costs.

\begin{tabular}{|c|c|c|} \hline Year & \begin{tabular}{c} Req 1 \\ Gross Profit (Loss) Recognized \\ ("Upon Completion") \end{tabular} & \begin{tabular}{c} Req 2 \\ Gross Profit (Loss) Recognized \\ ("Over Time") \end{tabular} \\ \hline 2024 & & \\ \hline 2025 & & \\ \hline 2026 & & \\ \hline Total project profit (loss) & & \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline \multicolumn{1}{|c|}{ Balance Sheet (Partial) } & 2024 & 2025 \\ \hline Current assets: & & \\ \hline & & \\ \hline & & \\ \hline Current liabilities: & & \\ \hline & & \\ \hline \end{tabular}