Mill Creek School District is a high school district in Mill Creek, Illinois. Mill Creek School District has 3 high schools within the district. The 3 high schools are Bradley High School, Mooney High School and Carr High School. Each high school has excellent sports facilities for the students. On June 1st, 2021 Mill Creek School District announced that they will be replacing the high school scoreboards at the 3 high school football fields within the district. Each school’s scoreboard will be customized for the school colors, mascots, school name and have a video screen. Mill Creek School District decided to hire Sports Scoreboards Inc. (SSI) for the building and installation of the customized scoreboards for a price of $975,000. SSI develops unique scoreboards and is the only company that can do the installation of their products. Mill Creek School District has excellent credit and both parties signed the agreement stipulating the payment terms and that SSI will build and install the scoreboards. SSI’s pricing includes a 12 month warranty. Mill Creek School District also elects to purchase a 2 year extended warranty for $30,000 for a total purchase price of $1,005,000. Additional information is as follows: Installation Deadline/TimetableStandalone PricingBradley High School ScoreboardAugust 1st, 2022$324,800Mooney High School ScoreboardAugust 1st , 2022$314,650Carr High School ScoreboardAugust 1st , 2022$334,9503 Year Extended Warranty $40,600 As an incentive to ensure the installation of the football scoreboards prior to the start of the 2022 football season Mill Creek School District has offered the following incentive to SSI: Completion of installation by June 1, 2022: $30,000 Bonus ($10,000 per scoreboard) Completion of installation by July 1, 2022: $21,000 Bonus ($7,000 per scoreboard) On Time Completion (i.e. August 1, 2022): $0 Bonus ($0 per scoreboard) Completion of installation after Aug. 1, 2022: $9,000 Penalty ($3,000 per scoreboard)SSI estimates that based upon their significant experience in the industry that they have a 75% likelihood of completing the scoreboards by June 1, 10% likelihood of completion by July 1, 8% likelihood the installation will be completed on time, and 7% likelihood it will be will be completed late (i.e. after August 1, 2022). The total payment for the project was made on June 2, 2021. Interest on comparable projects is equal to $75,000. Required:Apply the requirements of Revenue from Contracts with Customers to this case. Make sure you apply the detailed guidance/criteria for each of the 5 steps. Clearly label/explain all of your work and show any/all calculations.

Revenue Recognition means the recording of revenues of an entity in its books. It is an accrual…

Answered: Mill Creek School District is a high…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Question

Mill Creek School District is a high school district in Mill Creek, Illinois. Mill Creek School District has 3 high schools within the district. The 3 high schools are Bradley High School, Mooney High School and Carr High School. Each high school has excellent sports facilities for the students. On June 1^st, 2021 Mill Creek School District announced that they will be replacing the high school scoreboards at the 3 high school football fields within the district. Each school’s scoreboard will be customized for the school colors, mascots, school name and have a video screen. Mill Creek School District decided to hire Sports Scoreboards Inc. (SSI) for the building and installation of the customized scoreboards for a price of $975,000. SSI develops unique scoreboards and is the only company that can do the installation of their products. Mill Creek School District has excellent credit and both parties signed the agreement stipulating the payment terms and that SSI will build and install the scoreboards. SSI’s pricing includes a 12 month warranty. Mill Creek School District also elects to purchase a 2 year extended warranty for $30,000 for a total purchase price of $1,005,000.

Additional information is as follows:

	Installation Deadline/Timetable	Standalone Pricing
Bradley High School Scoreboard	August 1^st, 2022	$324,800
Mooney High School Scoreboard	August 1^st , 2022	$314,650
Carr High School Scoreboard	August 1^st , 2022	$334,950
3 Year Extended Warranty		$40,600

As an incentive to ensure the installation of the football scoreboards prior to the start of the 2022 football season Mill Creek School District has offered the following incentive to SSI:

Completion of installation by June 1, 2022: $30,000 Bonus ($10,000 per scoreboard)

Completion of installation by July 1, 2022: $21,000 Bonus ($7,000 per scoreboard)

On Time Completion (i.e. August 1, 2022): $0 Bonus ($0 per scoreboard)

Completion of installation after Aug. 1, 2022: $9,000 Penalty ($3,000 per scoreboard)

SSI estimates that based upon their significant experience in the industry that they have a 75% likelihood of completing the scoreboards by June 1, 10% likelihood of completion by July 1, 8% likelihood the installation will be completed on time, and 7% likelihood it will be will be completed late (i.e. after August 1, 2022).

The total payment for the project was made on June 2, 2021. Interest on comparable projects is equal to $75,000.

Required:

Apply the requirements of Revenue from Contracts with Customers to this case. Make sure you apply the detailed guidance/criteria for each of the 5 steps.

Clearly label/explain all of your work and show any/all calculations.

Expert Solution

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.