Treasure Island Corporation (TIC) sells time shares in luxury oceanfront cottages. During the year ended December 31, 2015, TIC completed a project consisting of 100 cottages in a particularly scenic portion of Hawaii. The project cost TIC $ 110.24 million. During the current year, TIC sold 1,924 weekly time shares in the cottages for $ 40,000 each. TIC’s sales policy requires a 20% down payment, so TIC only received $ 8,000 for each time share this year. Because TIC’s customers consist of only the most wealthy individuals, TIC does not anticipate any uncollectible accounts. Customers that purchased time shares will not make any more payments this year. TIC uses the full accrual method for revenue recognition purposes.
Prepare a memo to the file discussing how to account for this transaction. Include a discussion of what the account balances should be related to this transaction. (Ignore any interest on the amounts due from customers.) Support your conclusions using the Codification.