Question
Answer the requirements for each of the following separate cases. Round each of your answers to the nearest dollar. c . JJ Construction Inc. entered
Answer the requirements for each of the following separate cases. Round each of your answers to the nearest dollar.
c. JJ Construction Inc. entered into a contract with a customer to build a corporate office on January 1, 2020, for $18,000,000. The customer owns the construction in process during the construction process and the customer is under obligation to pay for any work completed, even if the contract is canceled. The office is expected to be completed in three years for a total cost of $11,400,000. Actual costs incurred through December 31, 2020, are $4,788,000. Determine the amount of revenue to record in 2020 assuming that the cost-to-cost method is used.
Revenue to recognize in 2020 | $ |
e. On January 1, 2020, Franchisee Inc. enters into a contract with Italian Fine Dining Inc. for the right (beginning immediately) to operate an Italian Fine Dining restaurant and receive on-going consulting services for a five-year period. The upfront fee of $180,000 also includes specialized equipment for $24,000. The standalone selling price of the franchise services and specialized equipment are $156,000 and $24,000, respectively. The equipment (with a cost of $18,000) was transferred to the franchisee on March 1, 2020. Determine the amount of revenue to recognize for Italian Fine Dining Inc. on January 1, 2020, March 1, 2020, and December 31, 2020
Revenue to recognize on March 1, 2020 | $ |
Revenue to recognize on December 31, 2020 | $ |
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