CH 17 P17-4 how to Journalize variable Consideration and Performance Obligations Satisfied over TIme?

On January 2 2019, T1 enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $3 million, and construction is expected to take 18 months Drewry is billed and pays $1,500,000 of the contract price on January 2, 2019, and will pay the balance at completion. Ti estimates that the cost of construction will be $2.2 million. Drewry includes two performance bonuses in the contact: U.S. Bonus: If the equipment design receives a U.S. patent by March 15, 2020, Drewry will pay a $300,000 bonus. International Bonus: If the equipment receives approval for international distribution by January 31, 2020, Drewry will pay a $1,000,000 bonus. The bonuses are payable when a U.S. patent is approved and when international distribution is approved. On the date the contract is signed. IT estimates that there is an 80% chance it will receive US patent protection by March 15, 2020, but only a 30% chance that the equipment will be approved for international distribution TI received a U.S. patent on the equipment design on November 15, 2019, and immediately billed Drewry and received its bonus payment. On December 31, 2019, TI has incurred $1,760,000 of contract costs and is 80% complete. TI won approval for international distribution on January 15, 2020, and completed the equipment project on April 15, 2020, at a cost of $2,200,000 Required: 1. Identify the performance obligations in the contract. 2. Provide the journal entries that TI should make to recognize revenue from the contract On January 2 2019, T1 enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $3 million, and construction is expected to take 18 months Drewry is billed and pays $1,500,000 of the contract price on January 2, 2019, and will pay the balance at completion. Ti estimates that the cost of construction will be $2.2 million. Drewry includes two performance bonuses in the contact: U.S. Bonus: If the equipment design receives a U.S. patent by March 15, 2020, Drewry will pay a $300,000 bonus. International Bonus: If the equipment receives approval for international distribution by January 31, 2020, Drewry will pay a $1,000,000 bonus. The bonuses are payable when a U.S. patent is approved and when international distribution is approved. On the date the contract is signed. IT estimates that there is an 80% chance it will receive US patent protection by March 15, 2020, but only a 30% chance that the equipment will be approved for international distribution TI received a U.S. patent on the equipment design on November 15, 2019, and immediately billed Drewry and received its bonus payment. On December 31, 2019, TI has incurred $1,760,000 of contract costs and is 80% complete. TI won approval for international distribution on January 15, 2020, and completed the equipment project on April 15, 2020, at a cost of $2,200,000 Required: 1. Identify the performance obligations in the contract. 2. Provide the journal entries that TI should make to recognize revenue from the contract