In year 1, Highrise Company contracts to manufacture a piece of customized equipment for a customer.The contract will take two years to complete.The contract price is $250,000 and the company estimates its total costs at $220,000.

Actual costs incurred are as follows:

Year 1 $121,000 Year 2 105,000

$226,000 What amount of gross income and deductions does the company recognize in each of the two years, assuming the company uses (1) the completed contract method and (2) the percentage-of-completion method of accounting for longterm contracts?

AppendixLO1