In 2018, Modern Construction Company entered into a contract to construct a building for $5,000,000. The estimated cost to complete the building is $4,000,000 and the project will be completed in 2019. Modern incurred actual construction costs of $1,600,000 and $1,800,000 in 2018 and 2019, respectively. How much gross profit is recognized using the percentage-of-completion method in 2018 and 2019?
What will be an ideal response?
2018: (1,600,000 / 4,000,000) × 5,000,000 = 2,000,000 revenue
2019: $5,000,000 - 2,000,000 = 3,000,000 revenue
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