Constructing and Assessing Income Statements Using Cost$-$to$-$Cost Method

Gilbert Construction contracted to build a shopping center at a contract price of $\backslash (\backslash$$ $1,540\backslash )$ million. The schedule of expected $($which equals actual$)$ cash collections and contract costs follows.

a$.$ Calculate the amount of revenue, expense, and net income for each of the three years, and for all three years combined, using the cost$-$to$-$cost revenue recognition method.

Note: Do not use a negative sign.

Note: Round answers to the nearest dollar, if applicable.

b$.$ Discuss whether or not the cost$-$to$-$cost method provides a good measure of this construction company's performance under the contract.

The cost$-$to$-$cost method normally provides a reasonable estimate of the revenues, expenses, and income earned for each period.