Required: Answer each case separately for each of the cases answer the following questions, do not combine answers or cases:

1. determine when the seller should recognize revenue and expense, and where it would be on the income statement

2. Explain your answer using GAAP revenue recognition guidelines.

3. Explain how each transaction would appear on the balance sheet for 2020.

Case 1: Your construction company entered into a four year contract to build a store for a fixed price of $7,000,000. You estimated costs at 6,200,000. It is now the end of the 2nd year and you estimate that you are 50% complete and your estimated cost to complete will be 7,500,000 because of labor problems. What are the two alternative methods and based on the method :

1. When do you recognize the revenue

2. What if you estimate a total loss on the project.

3.. What if you believe that the estimated costs can be reduced and you will make an overall profit on the project.