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Mill Construction Co. uses the percentage-of-completion method of accounting. During 1996, Mill contracted to build an apartment complex for Drew for $20,000,000. Mill estimated that total costs would amount to $16,000,000 over the period of construction. In connection with this contract, Mill incurred $2,000,000 of construction costs during 1996. Mill billed and collected $3,000,000 from Drew in 1996. What amount should Mill recognize as gross profit for 1996?
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