In Year 1, Northern Construction Agrees to Build a Fire $\text { Year } 1 \quad \text { Year } 2$

Multiple Choice

In year 1, Northern Construction agrees to build a fire station that will be completed in year 2.Construction starts in year 1.The station will have costs of $2,000,000 in year 1 and $2,000,000 in year 2.Northern receives payment for the station of $5,000,000 in advance, in year 1.If Northern uses the completed contract method, what net profit is recognized by Northern in each year?
$\text { Year } 1 \quad \text { Year } 2$

A) $\$ 0 \quad \$ 1,000,000$
B) $\$ 1,000,000 \quad \$ 0$
C) $\$ 3,000,000 \quad(\$ 2,000,000)$
D) $\$ 500,000 \quad \$ 500,000$
E) $\$ 250,000 \quad \$ 750,000$