Sum Revenue 52.5 Margin % Margin 17.5 20 50% Cost Year incurred 1 35 2 85 3 55 175 105 67.5 225 23.53% 22.73% x 12.5 50 b. Assume that Floyd Corporation determines that the work of the design/engineering division and the construction division requires too much coordination to be considered separate performance obligations. The combined performance obligation is satisfied over time and cost incurred is reflective of the value transferred to the customer. For years 1, 2, and 3, determine the amount that Floyd Corporation will recognize in revenue and expense. What is the margin percentage reported in each year? Note: Round answers to one decimal place, including percentages. (Ex: 0.2345 = 23.5%). Combined Cost Year incurred % Completed Revenue 1 35 20% 45 2 85 48.6% 109.35 x 3 55 31.4% 70.65 x Total 175 100% 225 Margin 10 24.35 x 15.65 x 50 Margin % 0% x 28.65% x 28.45% x Distinct Performance Obligations Floyd Corporation is a large engineering and construction company that designs and builds office buildings, apartment buildings, distribution warehouses and other structures for its customers. Projects usually begin with a design and engineering phase, followed by construction of the work customer's facility. The design/engineering and construction activities take place in separate divisions of Floyd Corporation, and these two divisions bill separately for their work. A typical three-year project might have the following pattern of work and billing (in $ millions). Design/Engineering Construction Total Cost Billings to Cost Billings to Cost Billings to Year incurred customer incurred customer incurred customer 1 35 50 35 50 2 10 15 75 60 85 75 3 5 10 50 90 55 100 Total 50 75 125 150 175 225 a. Assume that Floyd Corporation determines that the work of the design/engineering division and the construction division are separate performance obligations, that these performance obligations are satisfied over time, and that cost incurred is reflective of the value transferred to the customer. For years 1, 2, and 3, determine the amount that Floyd Corporation will recognize in revenue and expense. What is the margin percentage reported in each year? Note: Round answers to one decimal place, including percentages. (Ex: 0.2345 = 23.5%). Design/Engineering Cost Year incurred % Completed Revenue Margin Margin % 1 35 70% 52.5 17.5 0% x 2 10 20% 15 5 0% x 3 5 7.5 2.5 0% x 50 100% ~ 75 25 10% Construction Cost Year incurred % Completed Revenue 1 0 0% 0 2 75 60% 90 3 50 60 125 100% 150 Margin Margin % 0 0% 15 0% x 10 0% x 25 40%