Inexperienced construction company ABC Corp. signed a risky contract to build a research facility at a fixed contract amount of $2 million. The work began in early 2014 and ABC incurred costs of $900,000. At December 31, 2014, the estimated future costs to complete the project totalled $900,000. During 2015, ABC ran into trouble with weather conditions and incurred the expected costs of $900,000 and estimated that it would need to spend an additional $300,000 to complete the project. During 2016, ABC reluctantly completed the project, incurring further costs of $400,000.
Assuming that ABC uses the percentage-of-completion method and the earnings approach, prepare a schedule to calculate the amount of revenues and gross profit or loss to be recognized by ABC Corp. during the three years of the contract. Provide all journal entries.