Reference no: EM132848760

Question - Donald, Milly & Associates (DMA) is a Canadian manufacturer of satellites. It has been awarded and is responsible for completing numerous large contracts for the Canadian government. The construction of satellites is a long and complex process that takes several years from the date the contract is awarded to the date of delivery to the customer. This process involves the expertise of numerous teams, thousands of hours, materials, and other costs. Before bidding on a new project, DMA engages in a lengthy budgeting process to determine the cost to construct a new satellite that will meet the government's specifications.

At the beginning of 2021, DMA was awarded an $846,000,000 contract to construct a new satellite for the government. The contract consists of 12 major milestones, each of varying length and complexity, and is expected to take eight years to complete. DMA has budgeted that total project costs will be $692,500,000. As of the end of 2021, DMA had incurred costs of $56,500,000, completed the first construction milestone, and had billed the government an upfront fee of $75,000,000 plus $125,000,000 for completion of the first milestone. DMA reports under ASPE.

Required -

a) Determine the amount of revenue DMA should recognize in 2021.

b) Identify what note disclosure is required, if any, for the revenue associated with the contract.