Turner Construction Company agreed on January 1, Year 1, to construct an observatory for Dartmouth College for $120 million. Dartmouth College must pay $30 million on signing and $30 million at the end of Year 1, Year 2, and Year 3. Expected constructed costs are $10 million for Year 1, $60 million for Year 2, and $30 million for Year 3. Assume that these cash flows occur at the end of each year. Also assume that an appropriate interest rate for this contract is 10 percent. Amortization schedules for the deferred cash flows follow:

Required
a. Indicate the amount and nature of income (revenue and expense) that Turner would recognize during Year 1, Year 2, and Year 3 if it uses the completed-contract method. Ignore income taxes.
b. Repeat part a using the percentage-of-completion method.
c. Repeat part a using the installment method.
d. Indicate the balance in the Construction in Process account on December 31, Year 1, Year 2, and Year 3 (just prior to completion of the contract) under the completed-contract and the percentage-of-completion methods.

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Amortization Schedule for Cash Received Balance Jan. 1 Reduction Revenue Payment in Principal Balance Dec. 31 Interest Year $74,606 52,066 27,273 $7,460 5,207 2,727 30,000 30,000 30,000 $22,540 24,793 27,273 $52,066 27,273 Amortization Schedule for Cash Disbursed Balance Jan. 1 Balance Expense Payment in Principa Dec. 31 $79,339 27,273 Interest Reduction Year $81,217 79,339 27,273 $8,122 7,934 2,727 $10,000 60,000 30,000 S 1,878 52,066 27,273