Love Your Yard (LYY) is a landscaping firm, that serves both commercial and residential customers. On April 1, LYY entered into a three-month, $15,000 contract with a corporate customer for spring plantings and grounds maintenance. LYY’s billings are not conditioned on performance, and the contract requires end-of-month payments from the customer of $5,000 each.

In applying FASB ASC 606, LYY has determined that the contract includes a single performance obligation that meets the criteria for revenue recognition over time. At each month-end, LYY determined its progress under the contract to be as follows:

April 30 20% complete

May 31 70% complete

June 30 100% complete

Require

Prepare the journal entry that LYY should have recorded at each of the above month-end dates (ignoring LYY’s cost of providing the services) under FASB ASC 606.

Answer rating: 100% (QA)

The core principle of the guidance in Topic 606 is that an entity should recognize revenue to de... View the full answer