5.

Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project and the requirements for recognizing revenue over time are met. The total estimated cost of the project is $4,000,000 and the following information is available:

($ in thousands)	Year 1				Year 2				Year 3
Costs incurred	$	1,000			$	1,500			$	1,250
Estimated completion costs	$	3,000			$	1,500			$	0
Billings	$	750			$	1,750			$	2,500
Cash collected	$	500			$	1,500			$	3,000

Assuming that revenue is recognized over time, how much income is recognized in Year 3?

Multiple Choice

• $625,000

• $1,250,000

• $1,000,000

• $375,000