Problem: Reith Riley Construction Company uses the input method based on costs incurred to recognize revenue from a performance obligation satisfied over time. During Year 1, Reith Riley entered into a fixed-price contract to construct a shopping mall for $20 million. Information relating to the contract is presented below
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Dec-31
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Year 1
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Year 2
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Percentage of completion
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20%
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60%
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Estimated total costs at completion
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$15,000,000
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$16,000,000
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Gross profit recognized (cumulative)
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1,000,000
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2,400,000
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Required: What amount of Contract costs incurred during Year 2 should be reported?
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