How much revenue is recognized in the first year of the contract?

 

VALEDICTION Construction Co. entered into an 80M fixed price contract for the construction of a private road for FAREWELL SPEECH, Inc. The performance obligation on the contract is satisfied over time. VALEDICTION measures its progress on the contract using the "cost-to-cost" method. The estimated total contract cost is 40M. VALEDICTION incurred the following costs in the first year of the construction: Costs of negotiating the contract (charged immediately as expense Cost of materials used in construction Costs of materials purchased but not yet used in construction Site labor costs Site supervision costs Depreciation of equipment used in construction Depreciation of idle equipment not used in the contract Costs of moving equipment and materials to and from The construction site Costs of hiring equipment Advance payment to subcontractor (the subcontracted Work is not yet started) 400 000 12 000 000 2 000 000 4 000 000 800 000 480 000 240 000 160 000 560 000 80 000