Reference no: EM132671996

Question - Boat Builder Company currently is completing work on a boat that a customer contracted for on September 30, 2012 and expects to take delivery of on August 1, 2013. The $200,000 fixed price contract does not obligate the customer to pay Boat Builder until the boat is delivered and the title transfers to the customer. The boat is a basic design offered by Boat Builder. Customers individualize the basic boat by selecting custom trim, accessories and other finish details. Boat Builder typically fulfills specific customer orders rather than holding boats in inventory. If the customer cancels the contract prior to delivery, Boat Builder must be paid for any work completed up to that date. Boat Builder incurs initial design and selling costs of $10,000. Boat Builder's actual and expected building costs are $150,000, which consists of raw materials of $50,000 and labor costs of $100,000. The raw materials are purchased on October 1, 2012. Raw materials are consumed and direct labor costs are incurred evenly over the construction period.

Required - Under current GAAP, how much revenue should the Boat Builder Company recognize in 2012 and 2013?