Question 1

Disclosures concerning significant judgments in revenue recognition include all of the following except ________.

Accepted Answer

A)  information regarding fair value of consideration exchanged 
B)  methods used to recognize revenue 
C)  allocation of the transaction price 
D)  an assessment of whether an estimate of variable consideration is constrained 
A)  information regarding fair value of consideration exchanged 
B)  methods used to recognize revenue 
C)  allocation of the transaction price 
D)  an assessment of whether an estimate of variable consideration is constrained

Question 2

What are the issues to consider when determining the transaction price?

Accepted Answer

The following are the issues to be consi

Question 3

Gordo Yachts
At the beginning of 2019 Gordo Yachts enters into a contract to build a luxury yacht for a customer that is expected to take three years to complete. The contract price is $4,000,000. Completion is scheduled for the end of 2021. Gordo's year end is December 31. The following is a year by year summary of construction costs incurred and the estimated costs to complete the projects at the end of each year.
 $$\begin{array} { | l | c | c | c | } 
\hline & \underline { 2019 } & \underline { 2020 } & \underline { 2021 } \
\hline \begin{array} { l } 
\text { Actual costs incurred } \
\text { Eurrent year }
\end{array} & \$ 750,000 & \$ 2,250,000 & \$ 775,000 \
\hline \begin{array} { l } 
\text { actual costs incurred } \
\text { prior years }
\end{array} & \underline { - 0 - } & \underline { 750,000 } & \underline { 3,000,000 } \
\hline \begin{array} { l } 
\text { Cumulative actual costs } \
\text { incurred to date }
\end{array} & 750,000 & 3,000,000 & 3,775,000 \
\hline \begin{array} { l } 
\text { Estimated costs to } \
\text { complete end of year }
\end{array} & 2,250,000 & \underline { 750,000 } & \underline { - 0 - } \
\hline \text { Total Costs } & \$ 3,000,000 & \$ 3,750,000 & \$ 3,775,000 \
\hline \text { Billings } & \$ 700,000 & \$ 2,600,000 & \$ 700,000 \
\hline \text { Cash Collections } & 500,000 & 2,000,000 & 1,500,000 \
\hline
\end{array}$$
-Refer to Gordo Yachts. Compute the gross profit for 2019 and 2020 and 2021 using the percentage-of-completion method.

Accepted Answer

2019 $1,000,000 TGP × 750,000

Question 4

Disclosures required for revenue include all of the following except ________.

Accepted Answer

A)  disaggregation of revenue 
B)  performance obligations 
C)  assessing constraints on variable consideration 
D)  allocating assets 
A)  disaggregation of revenue 
B)  performance obligations 
C)  assessing constraints on variable consideration 
D)  allocating assets

Question 5

Greenwell Farm Equipment sells a tractor to Farmer for $40,000 on January 1, 2019. The tractor is delivered that day. Greenwell agrees that the Farmer may delay the payment for 2 years. The market rate of interest is 7%. Refer to Greenwell Farms. How much interest revenue will Greenwell report over the life of this contract? (Do not round intermediary calculations, and round your final answer to the nearest whole number.) Use the formula approach.

Accepted Answer

A)  $5,062 
B)  $2,800 
C)  $5,600 
D)  $5,796 
A)  $5,062 
B)  $2,800 
C)  $5,600 
D)  $5,796

Question 6

Companies may use the completed-contract method for all long-term contracts.

Accepted Answer

A) True 
 B)False

Question 7

U.S. GAAP sets a higher threshold for the assessment of collectibility of consideration from a contract than IFRS.

Accepted Answer

A) True 
 B)False

Question 8

Brutus Construction
Brutus Construction started work on a new high rise building on January 1, 2019, The project completion date is December 2021. The contract price is $54,000,000. The following are the actual costs incurred and estimates of cost to complete the project.
 $$\begin{array} { r c c } 
\text { Years } & \text { Actual costs incurred } & \text { Estimated costs to complete } \
2019 & \$ 15,000,000 & \$ 30,000,000 \
2020 & 22,500,000 & 22,500,000 \
2021 & 17,500,000 & - 0 -
\end{array}$$
-Refer to Brutus Construction. Calculate gross profit or loss for 2019, 2020 and 2021 using the percentage of completion method.

Accepted Answer

None

Question 9

Derby Company sells season passes to its entertainment center. The passes sell for $125 each and are good for one year. On January 1, Derby sells 4,800 passes and received cash. What journal entry should Derby Company make on January 31st assuming adjusting entries are made monthly?

Accepted Answer

A)  Debit Unearned Revenue; Credit Ticket Revenue 
B)  Debit Ticket Revenue; Credit Unearned Revenue 
C)  Debit Cash; Credit Unearned Revenue 
D)  Debit Unearned Revenue; Credit Cash 
A)  Debit Unearned Revenue; Credit Ticket Revenue 
B)  Debit Ticket Revenue; Credit Unearned Revenue 
C)  Debit Cash; Credit Unearned Revenue 
D)  Debit Unearned Revenue; Credit Cash

Question 10

Novella Company sells annual memberships to its auto club. The memberships cost $300 each. On January 1, Novella sold 16,000 memberships and received cash. How should Novella record the receipt of cash on January 1?

Accepted Answer

A)  revenue of $300 
B)  liability of $300 
C)  revenue of $4,800,000 
D)  liability of $4,800,000 
A)  revenue of $300 
B)  liability of $300 
C)  revenue of $4,800,000 
D)  liability of $4,800,000

Question 11

If multiple contracts are negotiated as a package and have a single commercial objective, the contracts should be combined and accounted for as ________.

Accepted Answer

A)  multiple contracts 
B)  a single contract 
C)  assets 
D)  liabilities 
A)  multiple contracts 
B)  a single contract 
C)  assets 
D)  liabilities

Question 12

Under the completed-contract method, revenues are only reported in the last year of the contract.

Accepted Answer

A) True 
 B)False

Question 13

What are the required disclosures for revenue contracts with customers?

Accepted Answer

The required disclosures for revenue con

Question 14

A performance obligation is a promise to transfer a good or service that is ________.

Accepted Answer

A)  indistinguishable 
B)  distinct 
C)  available 
D)  nondescript 
A)  indistinguishable 
B)  distinct 
C)  available 
D)  nondescript

Question 15

What are the five principal steps in the revenue recognition process?

Accepted Answer

The five principal steps in the revenue

Question 16

Able Company enters into a contract with a customer to provide them with an accounts receivable program. Able will also provide installation services as part of the contract. Able will make sure that this program will be installed so that it will be customized and be able to integrate with the company's other program modules. What is the number of performance obligations for this contract?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 17

The percentage-of-completion method recognizes gross profit ________.

Accepted Answer

A)  over the life of the contract 
B)  at the end of the contract 
C)  at the beginning of the contract 
D)  one year after completion of contract 
A)  over the life of the contract 
B)  at the end of the contract 
C)  at the beginning of the contract 
D)  one year after completion of contract

Question 18

Argus sells auto parts. On August 1, a customer purchases parts for $3,900 cash. The parts cost Argus $1,300. Argus uses the perpetual inventory method.
Required: Prepare the necessary entries to record the sale.

Accepted Answer

\[\begin{array} { | l | l | r | r | } 
\

Question 19

Gleason Construction enters into a long-term fixed price contract to build an office building for $30,000,000. In the first year of the contract Gleason incurs $8,000,000 of cost and the engineers determined that the remaining costs to complete are $12,000,000. How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the percentage-of-completion method? (Round the gross profit percentage to 4 decimal places)

Accepted Answer

A)  $22,000,000 profit 
B)  $18,000,000 loss 
C)  $4,000,000 profit 
D)  $12,000,000 loss 
A)  $22,000,000 profit 
B)  $18,000,000 loss 
C)  $4,000,000 profit 
D)  $12,000,000 loss

Question 20

The transaction price is always the price stated in the contract.

Accepted Answer

A) True 
 B)False

Disclosures concerning significant judgments in revenue recognition include all of the following except ________.

What are the issues to consider when determining the transaction price?

Disclosures required for revenue include all of the following except ________.

Companies may use the completed-contract method for all long-term contracts.

U.S. GAAP sets a higher threshold for the assessment of collectibility of consideration from a contract than IFRS.

Derby Company sells season passes to its entertainment center. The passes sell for $125 each and are good for one year. On January 1, Derby sells 4,800 passes and received cash. What journal entry should Derby Company make on January 31st assuming adjusting entries are made monthly?

Novella Company sells annual memberships to its auto club. The memberships cost $300 each. On January 1, Novella sold 16,000 memberships and received cash. How should Novella record the receipt of cash on January 1?

If multiple contracts are negotiated as a package and have a single commercial objective, the contracts should be combined and accounted for as ________.

Under the completed-contract method, revenues are only reported in the last year of the contract.

What are the required disclosures for revenue contracts with customers?

A performance obligation is a promise to transfer a good or service that is ________.

What are the five principal steps in the revenue recognition process?

The percentage-of-completion method recognizes gross profit ________.

Argus sells auto parts. On August 1, a customer purchases parts for $3,900 cash. The parts cost Argus $1,300. Argus uses the perpetual inventory method. Required: Prepare the necessary entries to record the sale.

The transaction price is always the price stated in the contract.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters

Exam 8: Revenue Recognition

Disclosures concerning significant judgments in revenue recognition include all of the following except ________.

What are the issues to consider when determining the transaction price?

Disclosures required for revenue include all of the following except ________.

Companies may use the completed-contract method for all long-term contracts.

U.S. GAAP sets a higher threshold for the assessment of collectibility of consideration from a contract than IFRS.

Derby Company sells season passes to its entertainment center. The passes sell for $125 each and are good for one year. On January 1, Derby sells 4,800 passes and received cash. What journal entry should Derby Company make on January 31st assuming adjusting entries are made monthly?

Novella Company sells annual memberships to its auto club. The memberships cost $300 each. On January 1, Novella sold 16,000 memberships and received cash. How should Novella record the receipt of cash on January 1?

If multiple contracts are negotiated as a package and have a single commercial objective, the contracts should be combined and accounted for as ________.

Under the completed-contract method, revenues are only reported in the last year of the contract.

What are the required disclosures for revenue contracts with customers?

A performance obligation is a promise to transfer a good or service that is ________.

What are the five principal steps in the revenue recognition process?

The percentage-of-completion method recognizes gross profit ________.

Argus sells auto parts. On August 1, a customer purchases parts for $3,900 cash. The parts cost Argus $1,300. Argus uses the perpetual inventory method. Required: Prepare the necessary entries to record the sale.

The transaction price is always the price stated in the contract.

The Financial Reporting Environment

Financial Reporting Theory

Judgment and Applied Financial Accounting Research

Review of the Accounting Cycle

Statements of Net Income and Comprehensive Net Income

Statements of Financial Position and Cash Flows and the Annual Report

Accounting and the Time Value of Money

Extenssion: Ol Revenue Recognition Previous Standard

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, Cost Allocation

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Leases

Extension: Ol Accounting for Leases Current Standard

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

The Statement of Cash Flows

Filters