Penner Builders contracted to build a high-rise for $28,000,000. Construction began in 2014 and is expected to be completed in 2017. Data for 2014 and 2015 are:

2014 2015

Costs incurred to date $3,600,000 $10,400,000

Estimated costs to complete 14,400,000 9,600,000

Penner uses the percentage-of-completion method.

Instructions

(a) How much gross profit should be reported for 2014? Show your computation.

(b) How much gross profit should be reported for 2015? Show your computation.