Question: Somo Corp. uses the cost-to-cost method for long term contracts. The corporation signs a contract for $80,000 for a construction project. It is estimated that

Somo Corp. uses the cost-to-cost method for long term contracts. The corporation signs a contract for $80,000 for a construction project. It is estimated that construction will take 2 years and will cost $50,000.

In year 1 costs incurred $20,000

Year 2 costs incurred $30,000

How much revenue does Somo recognize in year 1 and year 2? What is gross profit in year 1?

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