On September 1, 2019, Foster Construction signed a contract with Costa Enterprises to construct a new corporate headquarters and parking garage on land that Costa owns.

Foster determines that control of the building is passed to Costa as it is constructed, but control of the parking garage will transfer when the garage is completed. Costa will use the garage for its employees and open it for public parking. The contract price is $50 million for both the building and the garage, but Costa 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 $15,000. For each day after September 1, 2021, that the building is incomplete, the promised consideration will be reduced by $15,000. Foster 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 Costa's specifications and would require extensive alterations if used by another entity. The transaction has commercial substance, and Costa is in good financial health. 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, Foster will be entitled to a bonus of $350,000. Foster has been highly successful in achieving the certification on prior building projects. The terms of the contract stipulate that Costa will make a $50,000,000 payment to Foster at the completion of the project. Foster will have two years or 24 months (until September 1, 2021) to complete the project.Furthermore, Foster has an enforceable right to demand payment related to performance to date based on time elapsed.

Foster has constructed similar buildings and sold them for $26 million but does not have experience in garage construction. Foster is aware of similar garages constructed by their competitors that were sold for $14 million. Due to good weather, Foster is able to complete the building early. Foster completes the building and garage on August 21, 2021. Costa receives control and legal title on these dates. The building also receives the required green building certification on August 21, 2021. Costa pays Foster any amounts owed on September 1, 2021. Foster has a normal profit margin of 20% 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.

Step 3: Determine the transaction price. (Use the present value and future value tables, the formula method, a financialcalculator, 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.)

$??.??	(Pick from the list below)
$??.??	(Pick from the list below)
$??.??	(Pick from the list below)

List:

Noncash consideration

Significant financing component (interest revenue)

Significant financing component (sales revenue)

Variable consideration

Step 4: Allocate the transaction price to the performance obligations. (Enter percentages to two decimal places. X.XX%. Round your answers to the nearest whole dollar. If a box is not used in the table, leave the box empty; do not select a labelor enter a zero. Enter full dollar amounts, not millions.)

Performance Obligation	Standalone Selling Price	% of total	Transaction Price	Allocated Transaction price - excluding Variable Consideration	Allocated Variable Consideration	Total Allocation
(choose from list below)
(choose from list below)
Total			[Blank]

List:

Building

Certification

Garage

Step 5: Recognize revenue. (Record debits first, then credits. Exclude explanations from any journal entries. Do not round intermediary calculations. Only round the your final answers to the nearest whole dollar.)

1. Begin by recognizing revenue on construction projects and interest revenue in 2019.

2. Now recognize revenue on construction projects and interest revenue in 2020.

3. Recognize the revenue on construction projects and interest revenue on August 21, 2021.

4. Finally, record the payment received from Costa.

Account	Debit	Credit