Jones signs a three-year contract to construct a new office building for Smith. The contract price is $3 million and estimated cost $2 million. The contract does not qualify for revenue recognition over time. During year 1, Jones incurs costs of $800,000 and during year 2, costs of $1.2 million. At the end of year 2, Jones estimates that an additional $1.1 million will be necessary to complete the project. At the end of year 2, Jones should recognize: