Exam 8: Revenue Recognition

ABC Company enters into a contract with Edmond Library to help them streamline their purchasing process.The contract specifies that Edmond Library will pay ABC $50,000 in the form of a fixed fee plus an additional $20,000 if the library achieves $200,000 in cost savings.ABC estimates a 55% chance that the library will achieve a $200,000 savings.Assuming ABC estimates that the transaction price is the expected value transaction price.The transaction price is recorded as ________.

The cumulative percentage of completion is found by dividing the Total Costs Incurred to Date by the Estimated Total Cost of the Project.

A good or service must be explicitly identified in a contract.

The local Mini Mart makes sales of $2,000 on April 5,2016.The journal entry to record the transaction would be to ________.

A consignment sale is an example of a principal-agent arrangement.

Penn sells cameras.On August 1,a customer purchases a camera for $5,700 on account.The camera cost Penn $2,500.Penn uses the periodic inventory method.The customer paid for the camera at the end of the month. Required: Prepare all necessary entries to record the sale and collection of cash at the end of the month.

Refer to Tullis Construction.How much should Tullis report as Accounts Receivable at the end of year 1 on the balance sheet assuming the use of the percentage-of-completion method?

Able sells a piece of equipment to Smythe for $1,800 on August 1.The equipment cost $1,000.The equipment is picked up by Smythe on August 10.How is this transaction accounted for under a periodic system of inventory?

Costs and profits in excess of billings are carried on the balance sheet as a/an ________.

Two methods used to account for revenue recognition for long term contracts are the percentage-of-completion method and the ________.

Companies should not provide information to users about warranties and related obligations.

A contract with the customer may be written,oral,or implied by ________.

The right of return represents a separate performance obligation.

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

Which one of the following approaches is not a method for allocating a transaction price to multiple performance obligations?

Under the completed-contract method revenue is recognized ________.

Argus sells auto parts.On August 1,a customer purchases parts for $3,900 on account.The parts cost Argus $1,300.Argus uses the periodic inventory method.The customer paid for the parts on August 31. Required: Prepare the necessary entries to record the sale and the collection of cash at the end of the month.

If a contract includes non cash consideration,how should the transaction be measured?

A financing component exists in a sales contract if delivery occurs in advance of payment or payment occurs in advance of delivery by more than ________.

Refer to Aztec Company.Assuming Aztec estimates that the transaction price is the probability weighted amount of expected consideration.The transaction price is ________.