Rock Aerospace Company signed a contract on April 1, Year 4, to build a satellite for $28,000,000. Estimated costs for the contract are:
Year 4: $5,600,000
Year 5: $11,200,000
Year 6: $5,600,000
Assume that actual costs incurred coincide with expectations. Cash collections of the contract price are as follows:
Year 4: $4,200,000
Year 5: $7,000,000
Year 6: $16,800,000
Refer to the Rock Aerospace Company example. Income from the contract for Year 5 under the completed contract method is:
a. $1,400,000
b. $2,800,000
c. $3,360,000
d. None of the above