Question - Noah Construction Company is building a large complex for a contract price of $5,000,000. This is a three-year project estimated to cost $4,000,000 and the following information is available:
($ in thousands) Year 1 Year 2 Year 3
Cost incurred $1,000 $1,500 $1,250
Estimated completion costs $3,000 $1,500 $ 0
Billings $ 750 $1,750 $2,500
Cash collected $ 500 $1,500 $3,000
Using the percentage-of-completion method of revenue recognition, how much income is recognized in Year 2? Please show all work! I really want to understand how to do this.