Compute the amount of ABC revenue

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Problem - Assume that ABC Company agreed in February 2019 to construct an electricity generating facility for XYZ Energy, a utility serving the Seattle area. The contract price of $500 million is to be paid as follows:

$200 million at the time of signing; $100 million on December 31, 2019; and $200 million at completion in May 2020. ABC incurred the following costs in constructing the power plant: $100 million in 2019, and $300 million in 2020. The construction of the power generating facility is considered to be a single performance obligation.

Required -

a. Compute the amount of ABC's revenue, expense, and income for both 2019 and 2020 assuming that its performance obligation is fulfilled over time and that the costs it incurs are reflective of the value conveyed to Eversource.

b. Compute the amount of ABC's revenue, expense, and income for both 2019 and 2020 assuming that its performance obligation to construct the facility is fulfilled at a point in time (at the completion of construction).

Reference no: EM132462715

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