Question
Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over Time Watson Construction Company contracted to build a plant for $500,000. Construction started
Recording Long-Term Construction: Recognize Revenue at a Point in Time and Over Time
Watson Construction Company contracted to build a plant for $500,000. Construction started in January 2020 and was completed in November 2021. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow.
| 2020 | 2021 | |
|---|---|---|
| Costs incurred during year | $290,000 | $120,000 |
| Estimated additional costs to complete | 125,000 | 0 |
| Billings during year | 270,000 | 230,000 |
| Cash collections during year | 250,000 | 250,000 |
- Revenue Recognized at a Point in Time
- Revenue Recognized Over Time
a. Provide the 2020 and 2021 journal entries for Watson assuming revenue is recognized at a point in time. Provide entries for (1) construction costs incurred, (2) progress billings, (3) cash collections, and (4) revenues and expenses.
- Note: If a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero).
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Police Auditing Standards And Applications
Authors: Allan Y. Jiao
2nd Edition
0398090750, 978-0398090753
