In Year 1, Southern Construction Agrees to Construct a School $\text { Year } 1 \quad \text { Year } 2$

Multiple Choice

In year 1, Southern Construction agrees to construct a school building for $12,000,000, receiving payments for the work of $6,000,000 in both year 1 and year 2.Southern estimates that the costs will be $4,000,000 in Year 1 and $6,000,000 in Year 2.If Southern uses the percentage-of-completion method (based on total costs) , what amount of profit is recognized in each year of the contract?
$\text { Year } 1 \quad \text { Year } 2$

A) $\$ 0 \quad \$ 2,000,000$
B) $\$ 2,000,000 \quad \$ 0$
C) $\$ 1,000,000 \quad \$ 1,000,000$
D) $\$ 800,000 \quad \$ 1,200,000$
E) $\$ 2,000,000 \quad \$ 1,000,000$