Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606...

Transcribed Image Text:

Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606 (LO3-4) MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 20X1 and was completed in 20X2. Information relating to the contract follows: Costs incurred during the year Estimated additional cost to complete Billings during the year Cash collections during the year 20X1 $290,000 20x2 $150,000 145,000 260,000 240,000 265,000 285,000 Required: 1. Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. 2. Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Date General Journal 1 20X1 Construction in progress Cash, payables, materials, etc. [] i 2 20X1 Accounts receivable Construction expense 3 20X1 Cash Accounts receivable 4 20X2 Construction expense Construction in progress Construction revenue Debit Credit 290,000 290,000 260,000 260,000 240,000 240,000 290,000 350,000 5 20X2 Construction in progress 150,000 Cash, payables, materials, etc. 150,000 i 6 20X2 Accounts receivable Interest expense < Required 1 Required 2 Problem 3-3 Revenue recognition over time and at a point in time under ASC Topic 606 (LO3-4) MSK Construction Company contracted to construct a factory building for $525,000. Construction started during 20X1 and was completed in 20X2. Information relating to the contract follows: Costs incurred during the year Estimated additional cost to complete Billings during the year Cash collections during the year 20X1 $290,000 20x2 $150,000 145,000 260,000 240,000 265,000 285,000 Required: 1. Record the preceding transactions in MSK's books assuming it recognizes revenue over time and uses costs incurred to measure the extent to which its performance obligation has been satisfied. 2. Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Record the preceding transactions in MSK's books assuming it recognizes revenue at a point in time when control of the completed factory is transferred to the customer at the end of the project. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list View journal entry worksheet No Date General Journal 1 20X1 Construction in progress Cash, payables, materials, etc. [] i 2 20X1 Accounts receivable Construction expense 3 20X1 Cash Accounts receivable 4 20X2 Construction expense Construction in progress Construction revenue Debit Credit 290,000 290,000 260,000 260,000 240,000 240,000 290,000 350,000 5 20X2 Construction in progress 150,000 Cash, payables, materials, etc. 150,000 i 6 20X2 Accounts receivable Interest expense < Required 1 Required 2