On January 1, Year 1, Big Co. enters into a contract with a customer to build a bridge on the customers land for $2,500,000. The construction of the bridge is expected to be completed at the end of Year 3. Big determines that the progress toward completion of the bridge is reasonably measurable using the input method based on costs incurred. At contract inception, Big estimates that the expected total cost of construction will be $1,700,000. Below are the (1) actual costs incurred during each year, (2) expected costs to complete the construction, and (3) amounts billed to the customer:

	Year 1	Year 2	Year 3
Costs incurred each year	$ 700,000	$500,000	$800,000
Costs expected in the following years	1,300,000	675,000	0
Amounts billed to (and paid by) the customer each year	700,000	950,000	850,000

What amount of gross profit on this contract is recognized by Big in its Year 2 income statement?

$225,000

$400,000

$450,000

$0