Corus Corporation builds large cruise ships on a contract basis. The company uses the percentage of completion method of revenue recognition. The following information pertains to the construction contracts it had in place as of its year-end date of December 31, 2020. 

Required:

a. Calculate the revenue to be recognized in 2020.

b. While examining the Corus financial statements, the auditors noted that there was an error in the estimate of costs to complete the contracts in 2019. The “cost to complete” should have been $792 million instead of $612 million. In light of this evidence, how much revenue should be recognized in 2020?

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($ million) Cost incurred to date Cost to complete contracts Total price of contracts outstanding December 31, 2018 Revenue 2019 108 612 960 144 2020 320 480 960 a. 2