Watson Construction Company contracted to build a plant for $2,000,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Costs incurred Estimated costs to complete Billings Cash collections Required Year 1 Year 2 $1,160,000 $480,000 500,000 1,080,000 920,000 1,000,000 1,000,000 Point in Time Over Time a. What is the income statement impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2? Income statement Income reported: Year 1 S Income reported: Year 2 $ 0 0 b. What is the balance sheet impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2?
Watson Construction Company contracted to build a plant for $2,000,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Costs incurred Estimated costs to complete Billings Cash collections Required Year 1 Year 2 $1,160,000 $480,000 500,000 1,080,000 920,000 1,000,000 1,000,000 Point in Time Over Time a. What is the income statement impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2? Income statement Income reported: Year 1 S Income reported: Year 2 $ 0 0 b. What is the balance sheet impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 19RE
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