Question
Questions 7 and 8 are about the same contract. Lou Malnati's Pizza contracts with Chi-Town Construction to build a new restaurant. It will take Chi-Town
Questions 7 and 8 are about the same contract.
Lou Malnati's Pizza contracts with Chi-Town Construction to build a new restaurant. It will take Chi-Town two years to build the restaurant. The contract price is $1.8 million. Chi-Town started construction on 1/1/2021.
The table below shows information for the two years under the contract.
| Fiscal year | Construction costs incurred | Amounts billed to Lou Malnati's |
| 12/31/2021 | $700,000 | $1 million |
| 12/31/2022 | $650,000 | $800,000 |
Chi-Town management estimates the total cost of the contract to be $1.4 million as of 12/31/2021.
Assume for question 7 that the contract consists of a single performance obligation for delivery at the end of the contract.
Show what Chi-Town will report on its balance sheet and income statement accounts related to the contract for fiscal year 2021. Show your work.
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