Kleet Construction Company is engaged in a road construction contract to build a highway over a three-year period. Kleet will receive $26,100,000 for building five miles of highway. Kleet estimates that it will incur $25,000,000 of costs before the contract is completed. As of the end of the first year Kleet incurred $6,250,000 of costs allocated to the contract.

a. How much income from the contract must Kleet report during the first year?

b. Assume Kleet incurs an additional $12,500,000 of costs during the second year. How much income is reported during that year?

c. Assume that Kleet incurs an additional $6,950,000 of costs in the third and final year of the contract. How much does Kleet report during the third year?