On January 1, 2014, assume that Turner Construction Company agreed to construct an observatory for Dartmouth College for $120 million. Dartmouth College must pay $30 million upon signing and $30 million at the end of 2014, 2015, and 2016. Expected construction costs are $10 million for 2014, $60 million for 2015, and $30 million for 2016. Assume that these cash flows occur at the end of each year. Also assume that an appropriate interest rate for this contract is 10%. Amortization schedules for the deferred cash flows follow.

REQUIRED
a. Indicate the amount and nature of income (revenue and expense) that Turner would recognize during 2014, 2015, and 2016 if it uses the completed-contract method. Ignore income taxes.
b. Repeat Requirement a using the percentage-of-completion method.
c. Repeat Requirement a using the installment method.
d. Indicate the balance in the Construction in Process account on December 31, 2014, 2015, and 2016, (just prior to completion of the contract) under the completed-contract and the percentage-of-completion methods.

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Amortization Schedule for Cash Received (amounts in thousands) Balance Jan. 1 Interest Revenue Reduction in Principal $22,540 24,793 27,273 Balance Dec. 31 Year $74,606 52,066 27,273 $7A60 5,207 2,727 Payment $30,000 30,000 30,000 2014 2015 2016 $52,066 27273 Amortization Schedule for Cash Disbursed (amounts in thousands) Balance Jan. 1 Interest Expense $8,122 7,934 2,727 Reduction in Principal 1,878 52,066 27,273 Balance Dec. 31 Year Payment 2014 2015 2016 $81,217 79,339 27,273 10,000 60,000 30,000 $79,339 27273