On 1 January 2020, ABD Ltd signed a contract worth $6,000,000 to construct a light rail. The complex was to be built over three years, with progress payments of $2,000,000 to be made at the end of each year. Estimated costs were $4,500,000 and the following costs incurred and paid by ABD Ltd were in accordance with estimates and represented the percentage completed in each year (Assume no tax): $1,000,000 in 2020, $1,250,000 in 2021, and $2,250,000 in 2022. The project will be completed in December 2022.

Using the percentage of completion method, how much profit will ABD report for the financial year ended 31 December 2022? (assume for this question, the financial year starts on 1 January 2022 and ends on 31 December 2022) (1 mark)

In your answer, include numbers only. No text, no commas, no signs or symbols etc.

$ Answer