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

Notes: 1. Sales price refers to total sales price for the whole warehouse facility, and estimated costs refer to the total estimated costs of this project. According to the table above, the total contract price remains the same (never amended) during the 3 years contracting period, but total costs estimation increased in Year 2. 2. Costs incurred to date refers to the accumulated costs the company spent on building the facility at the end of each year. Such costs are also referred to as costs to fulfill a contract. 3. Billed to date refers to how much the company has billed its customer for the facility they are building so far. 4. Received in cash to date is the accumulated amount the company has received from its customer.

Question:

1. How will the construction project be shown on balance sheet at the end of Year 1? (show your calculation of the balance of the project. )

2. Which section the balance belongs to? Please choose from the follows i. Assets ii. Liabilities iii. Equity iv. Revenue v. Expense

3. Please briefly explain why you choose what you choose.

Account Name:

Cash in advance

Construction in progress

Construction expense

Contracts payable

Contracts receivable

Customer advance

Income summary

Prepaid expense

Progress billings

Revenue Unearned revenue