QUESTION 82 Measuring progress — “cost-to-cost” method Contractor enters into a contract with Government to build an aircraft carrier for a fixed price of $4 billion. The contract contains a single performance obligation that is satisfied over time. Additional contract characteristics are: • Total estimated contract costs are $3.6 billion, excluding costs related to wasted labor and materials. • Cost incurred in year one is $ 740 million, including $20 million of wasted labor and materials. Contractor concludes that the performance obligation is satisfied over time as Government controls the aircraft carrier as it is created. Contractor also concludes that an input method using costs incurred to total cost expected to be incurred is an appropriate measure of progress toward satisfying the performance obligation. How much revenue and cost should Contractor recognize as of the end of year one?