Assume General Electric Company agreed in May 2016 to construct a nuclear generator for NSTAR, a utility company serving the Boston area. The contract price of $1,500 million is to be paid as follows: $500 million at the time of signing; $500 million on December 31, 2016; and $500 million at completion in May 2017. General Electric incurred the following costs in constructing the generator: $480 million in 2016 and $720 million in 2017.
Compute the amount of General Electric's revenue, expense, and income for both 2016 and 2017, and for both years combined, under the cost-to-cost revenue recognition method. Enter dollar amounts in millions.

Explanation:

The computation is shown below:

             (A)                         (B)                        C = $1,500 × B        D = C - A                  

Year      Cost incurred      Percentage         Contract price           Income

                                                                   Or revenue recognized

2016      $480 million          40%                   $600 million              $120 million

2017       $720 million          60%                   $900 million             $180 million

Total       $1,200 million      100%                 $1,500 million          $300 million

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