Constructing and Assessing Income Statements Using Cost-to-Cost Method On March 15, 2012, Frankel Construction contracted to build a shopping center at a contract price of $120 million. The schedule of expected (which equals actual) cash collections and contract costs follow ($ millions): Year Cash Collections Cost Incurred 2012 $ 30 $ 10 2013 50 25 2014 40 50 Total $ 120 $ 85 (a) Calculate the amount of revenue, expense, and net income for each of the three years 2012 through 2014 using the cost-to-cost method. Rounding instructions: Round percentages to the nearest whole number. Use rounded percentages for remaining calculations. Round revenue and income to the nearest whole number Enter $ answers in millions. Cost-to-CostMethod Percent of total Revenue expected costs recognized Income Costs Year incurred 2012 $ 2013 2014 $85 $120 $35 (b) Which of the following statements best summarizes our conclusion about the usefulness of the cost-to-cost method for this company? The cost-to-cost method is not useful because it does not provide information about the total revenues over the life of the project. The cost-to-cost method is an acceptable method under GAAP for contracts spanning more than one accounting period. The cost-to-cost method does not provide a good estimate of the revenue and income earned in each period. The cost-to-cost method is not useful because it is so dependent upon the completion estimate used by the company and can be easily manipulated