On January $2,2019,$ TI enters into a contract with Drewry Corp. to build a new piece of equipment. The contract price is $$3,000,000,$ and construction is expected to take $18$ months. Drewry is billed and pays $$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 $$2,100,000.$

Drewry includes two performance bonuses in the contact:

$$ U$.$S$.$ Bonus: If the equipment design receives a U$.$S$.$ patent by March $15,2020,$ Drewry will pay a $$400,000$ 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, TI estimates that there is an $80\%$ chance it will receive U$.$S$.$ 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 $$1,680,000$ of contract costs and is $80\%$ complete. TI won approval for international distribution on January $15,2020,$ and completed the equipment project on April $15,2020,$ at a cost of $$2,100,000.$

Required:

$1.$ Identify the performance obligations in the contract.

Identify the performance obligations in the contract. Check all that apply.

Build the new piece of equipment

Acquire the patent.

Receive international distribution approval

$2.$ Provide the jouentries to record

$1.$ the initial contract billing and receipt on January $2,2019$

$2.$ the patent billing and receipt on November $15$

$3.$ contract costs incurred for the year on December $31$

$4.$ profit recognized for the year on December $31$

$5.$ the partial contract billing and receipt on January $15,2020$

$6.$ costs incurred for the year to date on April $15$

$7.$ profit recognized for the year to date on April $15$

$8.$ the final entry to close the construction accounts on April $15,2020$