1. determine when the seller should recognize revenue.

2. Explain your answer using GAAP revenue recognition guidelines.

3. Explain how each transaction would appear on the income statement and balance sheet for 2017.

Case 1: Your construction company entered into a four year contract to build a store for a fixed price of$7,000,000. You estimated your costs at 6,200,000. At the end of the 2nd year you estimate that you are 50% complete and your estimate to complete will be 7,500,000 because of labor problems. What are the two alternative methods that can be used to record revenue on this multi-year project and what is the affect if:

1. You estimate a total loss on the project.

2. You believe that the estimated costs can be reduced and you will make an overall profit on the project.