Carbon Corporation Had a $2,000,000 Contract to Build a Small

Multiple Choice

Carbon Corporation had a $2,000,000 contract to build a small hospital with total costs estimated at $1,600,000.It received the following payments and incurred the following expenses over the three-year contract period:
$\begin{array}{lll}\underline{\text { Year } }&\underline{ \text { Payments }}& \underline{\text { Expenses }}\\1 & \$ 400,000 & \$ 300,000 \\2 & \$ 1,200,000 & \$ 900,000 \\3 & \$ 400,000 & \$ 550,000\end{array}$

Under the percentage-of-completion method, how much profit should Carbon recognize in year 2?

A) $400,000
B) $300,000
C) $225,000
D) $150,000