Don't give answer in image Watson Construction Company contracted to build a plant for $2,000,000. Construction started in January of Year 1 and was completed in November of Year 2. Watson uses thecost-to-cost method to measure the completion of its performance obligations. Data relating to the contract follow.As of December 31Costs incurredEstimated costs to completeBillingsCash collectionsRequiredYear 1$1,160,000500,0001,080,000 920,0001,000,000 1,000,000Point in Time Over TimeYear 2$480,000a. What is the income statement impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2?Income statementIncome reported: Year 1 $Income reported: Year 2 $Receivables00b. What is the balance sheet impact of the contract assuming revenue is recognized at a point in time for Year 1 and Year 2?Balance sheetDec. 31, Year 1Dec. 31, Year 2Inventory-Construction in process, net of billingsDec. 31, Year 1Dec. 31, Year 2$$$$0000

Financial statements are the set of records of the financial transactions and position of a business…

Watson Construction Company contracted to build a plant for $2,000,000. 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. As of December 31 Costs incurred Estimated costs to complete Billings Cash collections Required Year 1 Year 2 $1,160,000 $480,000 500,000 1,080,000 920,000 1,000,000 1,000,000 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? Income statement Income reported: Year 1 S Income reported: Year 2 $ 0 0 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?