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Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows Completed Contract Method under U.S. GAAP and adopts progress billing

Stoney Construction Co. enters a 3-year contract to build a new warehouse facility. Stoney follows Completed Contract Method under U.S. GAAP and adopts progress billing accounting for its construction project. Information for Years 1, 2, and 3 is shown below:

Year 1

Year 2

Year 3

Sales price

$ 2,800,000

$ 2,800,000

$ 2,800,000

Estimated costs

$ 1,600,000

$ 2,000,000

$ 2,000,000

Costs incurred to date (paid in cash)

$ 400,000

$ 900,000

$ 2,000,000

Billed to date

$ 250,000

$ 1,150,000

$ 2,800,000

Received in cash to date

$ 190,000

$ 950,000

$ 2,800,000

1) What is the gross profit recognized in Year 3? (Show work/ individual calculations)

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