Question 2 Debackere Construction Corp. contracted with Aggretsuko Inc. to build a karaoke machine factory for $500,000. Construction started in January 2020 and was completed in November 2021. Debackere uses the cost-to-cost method to measure progress toward completion of its performance obligations. Here is the data for this contract: 2020 2021 Costs incurred during the year $290,000 $120,000 Estimated costs to complete 125,000 Billings during the year 270,000 230,000 Cash collections during the year 250,000 250,000 2a. Prepare a table similar to what we did in the lecture notes for tracking the contract over the two years 2c. Write the necessary journal entries for Debackere in 2020 and 2021 assuming that revenue is recognized over time. 2b. Write the necessary journal entries for Debackere in 2020 and 2021 assuming that revenue is recognized at a point in time. 2d. Show the impact of the contract on the income statement for each year if revenue is recognized at a point in time (2b) and then again for over time (2c). 2f. Write the entries in 2020 for both point-in-time and over-time methods if the estimated costs- to-complete were projected to be $230,000. 2g. Why was FASB so adamant that companies generally report revenue over time instead of letting companies pick or choose "over time" versus "at a point in time"? Under what circumstances does FASB force companies to report revenues at a point in time? Question 2 Debackere Construction Corp. contracted with Aggretsuko Inc. to build a karaoke machine factory for $500,000. Construction started in January 2020 and was completed in November 2021. Debackere uses the cost-to-cost method to measure progress toward completion of its performance obligations. Here is the data for this contract: 2020 2021 Costs incurred during the year $290,000 $120,000 Estimated costs to complete 125,000 Billings during the year 270,000 230,000 Cash collections during the year 250,000 250,000 2a. Prepare a table similar to what we did in the lecture notes for tracking the contract over the two years 2c. Write the necessary journal entries for Debackere in 2020 and 2021 assuming that revenue is recognized over time. 2b. Write the necessary journal entries for Debackere in 2020 and 2021 assuming that revenue is recognized at a point in time. 2d. Show the impact of the contract on the income statement for each year if revenue is recognized at a point in time (2b) and then again for over time (2c). 2f. Write the entries in 2020 for both point-in-time and over-time methods if the estimated costs- to-complete were projected to be $230,000. 2g. Why was FASB so adamant that companies generally report revenue over time instead of letting companies pick or choose "over time" versus "at a point in time"? Under what circumstances does FASB force companies to report revenues at a point in time
