I'd greatly appreciate if you can show me how to get the answer, regardless of giving me the full answer:)
(Click the icon to view the Future Value of $1 table) (Click the icon to view the Future Value of an ordinary Annuity lable. (Click the icon to view the Future Value of an Annuity Due table) (Click the icon to view the Present Value of $1 table (Click the icon to view the Present Value of an ordinary Annui table.) (Click the icon to view the Present Value of an Annuity Due table.) On September 1, 2019. Snyder Construction signed a contract with Rassi Enterprises to construct a new corporate headquarters and parking garage an land that Rossi owns (Click the icon to view additional contract details.) Click the icon for additional information) Requirement Perform the five steps in the revenue recognition process. Provide all necessary joumal entries. Step 1: Identify the contract 1: Indicate whether each criterion has been met and select an explanation for each (.) Click the icon to review the explanations.) Crtarian 1. All parties to the contract have agreed to the contract and are committed to performing under the contract. ell 2 2. Each party's rights with respect to the goods or services that are being transferred are identifiable. 3 The payment terms for the goods or services that are being transferred are identifiable. 4. The contract has commercial substance. 5. It is probable that the seller will collect the consideration to which it is entitled in exchange for the goods or services Met? Yes Explanation . d. Yes a. Yes 9. . b. Yes Yes Step 2. Identify the performance obligations O A There are posibly two performance obligations- the buiding and the garage. These two items do not appear to be distinct as Rossi cannot benefit from the building on its own as indicated by Rassi not having control of the building prior to completion. However, Rossi does have control of the garage prior to completion. Thus, the promise of the seller to deliver the garage is separately identifiable from other promises in the contract to deliver the building B. There are possibly two performanos obligations - the building and the garage. These two items appear to be distinct as Rossi can benefit from the buiding on its own as indicated by Rossi having control of the building prior to completion. However, Rossi does not have control of the garage prior to completion. Thus, the promise of the seller to deliver the building is separately identifiable from other promises in the contract to deliver the garage. OC. There is only one performance obligation - the combined product of the building and the garage. Since the contract is to construct a new corporale headquarters and a parking garage, these components cannot be segregated. Thus, Snyder is obligated to perform the contract in its entirely OD. There are possibly two performance obligations - 10 complete the building before September 1, 2021 and to pass the green bulding certification. These two items appear to be distinct as the completion of the bulding and the inspection for certification are on two diferent dates, Step 3: Determine the transaction price. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. Use the same method for all calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round intermediary currency computations and your final answers to the nearest whole dollar.) O A. There are control of ti B. There are! Noncash consideration garage pric C. There is or Significant financing component (interest revenue) entirety. D. There are significant financing component (sales revenue) Step 3: Determine amounts rounded 1 Variable consideration (Click the icon for additional information.) More Info Requirement Perform the five steps in the revenue recognition process. Provide all necessary journal entrie More Info Snyder has constructed similar buildings and sold them for $34 million but does not have experience in garage construction. Snyder is aware of similar garages constructed by their competitors that were sold for $6 million. Snyder determines that control of the building is passed to Rossi as it is constructed, but control of the parking garage will transfer when the garage is completed. Rossi will use the garage for its employees and open it for public parking. The contract price is $30 million for both the building and the garage, but Rossi includes a price adjustment for early or late completion of the building. For each day before September 1, 2021, that the building is completed, the promised consideration will increase by $25,000. For each day after September 1, 2021, that the building is incomplete, the promised consideration will be reduced by $25,000. Snyder considers it 70% likely that it will complete the building seven days early, 10% likely that it will complete the project on time, and 20% likely that the project will be delayed five days. The building is constructed based on Rossi's specifications and would require extensive alterations if used by another entity. The transaction has commercial substance, and Rossi is in good financial health. Due to good weather, Snyder is able to complete the building early. Snyder completes the building and garage on August 21, 2021. Rossi receives control and legal title on these dates. The building also receives the required green building certification on August 21, 2021. Rossi pays Snyder any amounts owed on September 1, 2021. Snyder has a normal profit margin of 15% and an interest rate of 10%. It allocates interest revenue on a straight-line basis. It is a calendar-year company that prepares financial statements annually. It uses time elapsed as its measure of progress for performance obligations that are satisfied over time. The parties have also agreed that the building will be inspected and assigned a green building certification level. If the building achieves the certification level specified in the contract, Snyder will be entitled to a bonus of $180,000. Snyder has been highly successful in achieving the certification on prior building projects. The terms of the contract stipulate that Rossi will make a $30,000,000 payment to Snyder at the completion of the project. Snyder will have two years or 24 months (until September 1, 2021) to complete the project. Furthermore, Snyder has an enforceable right to demand payment related to performance to date based on time elapsed. Print Done (Click the icon to view the Future Value of $1 table) (Click the icon to view the Future Value of an ordinary Annuity lable. (Click the icon to view the Future Value of an Annuity Due table) (Click the icon to view the Present Value of $1 table (Click the icon to view the Present Value of an ordinary Annui table.) (Click the icon to view the Present Value of an Annuity Due table.) On September 1, 2019. Snyder Construction signed a contract with Rassi Enterprises to construct a new corporate headquarters and parking garage an land that Rossi owns (Click the icon to view additional contract details.) Click the icon for additional information) Requirement Perform the five steps in the revenue recognition process. Provide all necessary joumal entries. Step 1: Identify the contract 1: Indicate whether each criterion has been met and select an explanation for each (.) Click the icon to review the explanations.) Crtarian 1. All parties to the contract have agreed to the contract and are committed to performing under the contract. ell 2 2. Each party's rights with respect to the goods or services that are being transferred are identifiable. 3 The payment terms for the goods or services that are being transferred are identifiable. 4. The contract has commercial substance. 5. It is probable that the seller will collect the consideration to which it is entitled in exchange for the goods or services Met? Yes Explanation . d. Yes a. Yes 9. . b. Yes Yes Step 2. Identify the performance obligations O A There are posibly two performance obligations- the buiding and the garage. These two items do not appear to be distinct as Rossi cannot benefit from the building on its own as indicated by Rassi not having control of the building prior to completion. However, Rossi does have control of the garage prior to completion. Thus, the promise of the seller to deliver the garage is separately identifiable from other promises in the contract to deliver the building B. There are possibly two performanos obligations - the building and the garage. These two items appear to be distinct as Rossi can benefit from the buiding on its own as indicated by Rossi having control of the building prior to completion. However, Rossi does not have control of the garage prior to completion. Thus, the promise of the seller to deliver the building is separately identifiable from other promises in the contract to deliver the garage. OC. There is only one performance obligation - the combined product of the building and the garage. Since the contract is to construct a new corporale headquarters and a parking garage, these components cannot be segregated. Thus, Snyder is obligated to perform the contract in its entirely OD. There are possibly two performance obligations - 10 complete the building before September 1, 2021 and to pass the green bulding certification. These two items appear to be distinct as the completion of the bulding and the inspection for certification are on two diferent dates, Step 3: Determine the transaction price. (Use the present value and future value tables, the formula method, a financial calculator, or a spreadsheet for your calculations. Use the same method for all calculations. If using present and future value tables or the formula method, use factor amounts rounded to five decimal places, X.XXXXX. Round intermediary currency computations and your final answers to the nearest whole dollar.) O A. There are control of ti B. There are! Noncash consideration garage pric C. There is or Significant financing component (interest revenue) entirety. D. There are significant financing component (sales revenue) Step 3: Determine amounts rounded 1 Variable consideration (Click the icon for additional information.) More Info Requirement Perform the five steps in the revenue recognition process. Provide all necessary journal entrie More Info Snyder has constructed similar buildings and sold them for $34 million but does not have experience in garage construction. Snyder is aware of similar garages constructed by their competitors that were sold for $6 million. Snyder determines that control of the building is passed to Rossi as it is constructed, but control of the parking garage will transfer when the garage is completed. Rossi will use the garage for its employees and open it for public parking. The contract price is $30 million for both the building and the garage, but Rossi includes a price adjustment for early or late completion of the building. For each day before September 1, 2021, that the building is completed, the promised consideration will increase by $25,000. For each day after September 1, 2021, that the building is incomplete, the promised consideration will be reduced by $25,000. Snyder considers it 70% likely that it will complete the building seven days early, 10% likely that it will complete the project on time, and 20% likely that the project will be delayed five days. The building is constructed based on Rossi's specifications and would require extensive alterations if used by another entity. The transaction has commercial substance, and Rossi is in good financial health. Due to good weather, Snyder is able to complete the building early. Snyder completes the building and garage on August 21, 2021. Rossi receives control and legal title on these dates. The building also receives the required green building certification on August 21, 2021. Rossi pays Snyder any amounts owed on September 1, 2021. Snyder has a normal profit margin of 15% and an interest rate of 10%. It allocates interest revenue on a straight-line basis. It is a calendar-year company that prepares financial statements annually. It uses time elapsed as its measure of progress for performance obligations that are satisfied over time. The parties have also agreed that the building will be inspected and assigned a green building certification level. If the building achieves the certification level specified in the contract, Snyder will be entitled to a bonus of $180,000. Snyder has been highly successful in achieving the certification on prior building projects. The terms of the contract stipulate that Rossi will make a $30,000,000 payment to Snyder at the completion of the project. Snyder will have two years or 24 months (until September 1, 2021) to complete the project. Furthermore, Snyder has an enforceable right to demand payment related to performance to date based on time elapsed. Print Done
