Watson Construction Company contracted to build a plant for $2,000,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. As of December 31 Costs incurred Estimated costs to complete Billings Cash collections Required Point in Time Year 1 Year 2 $1,160,000 $480,000 a. What is the income statement impact of the contract assuming evenue is recognized over time for Year 1 and Year 2? Compute the percent complete at the end of the first year. Denominator Percent Complete Numerator At the end of Year 1 s Income statement Income reported: Year 1 $ Income reported: Year 2 $ 500,000 1,080,000 920,000 1,000,000 1,000,000 Over Time Receivables Dec. 31, Year 1 Dec. 31, Year 2 0 $ Note: Use the result EXACTLY as displayed above in the calculations below. 0 0 0 = b. What is the balance sheet impact of the contract assuming revenue is recognized over time for Year 1 and Year 2? Balance sheet Inventory-Construction in process, net of billings Dec. 31, Year 1 Dec. 31, Year 2 $ $ $ $ 0 0 Result 0 96 0