Kingdom Communication Systems signs a contract to develop and install an integrated network for a customer in five phases. Suppose that each phase is considered a performance obligation. The transaction price for the contract is $2,900,000. Each phase is fully functional at the point of delivery. If sold separately, the five phases of the total network products each have standalone values as follows:

The contract price is collected in advance from the customer and Phases 1 and 2 are completed during the current year. Kingdom expects Phase 3 and 4 to be completed in the next 12 months, and Phase 5 in the year after that. How much revenue will be recognized during the current period?

I don't understand why the contract price for the current period is just the sum of the first 2 phases: 1,163,000

Why do you have to divide this by total cost and multiply by the transaction price to get the correct answer?

Please explain and show steps for how and why to do this.

Network Phase Selling price if sold alone Phase 1 453,000 Phase 2 710,000 Phase 3 520,000 Phase 4 460,000 Phase 5 877,000