Preparing Financial Statement Presentation for Long-Term Contracts Watson Construction Company contracted to build a plant for $250,000. Construction started in January of Year 1 and was completed in November of Year 2 Watson uses the cost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow. Required Point in Time Over Time a. What is the income statement impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2 ? \begin{tabular}{|l|ll|} \hline \multicolumn{3}{|c|}{ Income statement } \\ \hline Income reported: Year 1 & $ & 0 \\ \hline Income reported: Year 2 & $ & 0 \\ \hline \end{tabular} b. What is the balance sheet impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2? \begin{tabular}{|c|c|c|} \hline \multicolumn{3}{|c|}{ Balance sheet } \\ \hline Receivables & & \\ \hline Dec. 31, Year 1 & $ & 0 \\ \hline Dec. 31, Year 2 & $ & 0 \\ \hline Inventory-Constr & & \\ \hline Dec. 31, Year 1 & $ & 0 \\ \hline Dec. 31, Year 2 & $ & 0 \\ \hline \end{tabular} a. What is the income statement impact of the contract assuming evenue is recognized over time for Year 1 and Year 2 ? Compute the percent complete at the end of the first year. -Note: Use the result EXACTLY as displayed above in the calculations below. b. What is the balance sheet impact of the contract assuming revenue is recognized over time for Year 1 and Year 2