Sandoval, Inc. signed a $40 million contract to build a new office building. The company expected that the project would take about two and one-half years. During the first year, the company incurred the following costs:

Raw materials .................$4 million

Direct labor ....................6 million

Overhead (insurance, equipment rental, etc.) .....2 million

At the end of the first year, management is very pleased with its construction to date. The costs incurred are consistent with the estimate that the project is 40% completed. Determine the amount of

(a) Revenue and

(b) Expense that the builder should report on its income statement at the end of the first year.