Question 1

Refer to Jones Corporation.Using the expected-value approach the transaction price would be ________.

Accepted Answer

A) $200,000 
B) $250,000 
C) $310,000 
D) $350,000 
A) $200,000 
B) $250,000 
C) $310,000 
D) $350,000

Question 2

An automotive magazine charges an annual subscription fee of $300,with customers prepaying the fee.Subscribers receive 50 issues for the annual fee.The publisher provides the new subscribers with a discount coupon good for a 30 percent discount on a race car ride at a major track.The list price of the ride along experience is $200.The company estimates that 35% of the coupons will be utilized.What is the number of performance obligations?

Accepted Answer

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

Question 3

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.The contract also includes a 12 month service plan.How many performance obligations are included in this transaction?

Accepted Answer

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

Question 4

Refer to Camey Construction.How much gross profit should Camey recognize in Year 1 assuming the use of the percentage of completion method?

Accepted Answer

A) $375,000 
B) $750,000 
C) $937,500 
D) $5,000,000 
A) $375,000 
B) $750,000 
C) $937,500 
D) $5,000,000

Question 5

An exception to the general rule is that the transaction price should be allocated based on the relative standalone selling prices occurs when the contract includes variable consideration.

Accepted Answer

A) True 
 B)False

Question 6

For information to be relevant it should have predictive value which is a primary reason to use the completed-contract method.

Accepted Answer

A) True 
 B)False

Question 7

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.The customer is free to enlist the services of another entity to install the software.What is the number of performance obligations for this contract?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 3 
A) 0 
B) 1 
C) 2 
D) 3

Question 8

When a contract fails to meet the collectibility criteria the seller should record any advance payment as a/an ________.

Accepted Answer

A) asset 
B) revenue 
C) liability 
D) expense 
A) asset 
B) revenue 
C) liability 
D) expense

Question 9

If the sum of standalone selling prices is greater than the transaction price,then any discount to the separate performance obligations should be allocated based on relative ________.

Accepted Answer

A) market values 
B) standalone prices 
C) book values 
D) net present values 
A) market values 
B) standalone prices 
C) book values 
D) net present values

Question 10

Hepner Products enters into a contract with Tullis to s ell three different products.The total price is $350,000.Each of the products is a separate performance obligation.Based on the information presented in the table,what is the allocated transaction price of product Z using the expected-cost-plus-a-profit margin approach?

Accepted Answer

A) $99,167 
B) $164,700 
C) $75,000 
D) $140,300 
A) $99,167 
B) $164,700 
C) $75,000 
D) $140,300

Question 11

White Labs is a wholesaler who sells microscopes for use in high schools to retailers.On August 1 White contracts with the XYZ to sell 1,000 microscopes to XYZ to be delivered September 1.The contract price is set at $300 each,with a 10% volume discount if sales exceed 2,500 microscopes within the year.The probability of sales of 2,500 microscopes is expected to be 55%.Using the most-likely-amount approach the consideration to be recognized is estimated to be ________.

Accepted Answer

A) $270,000 
B) $300,000 
C) $165,000 
D) $100,000 
A) $270,000 
B) $300,000 
C) $165,000 
D) $100,000

Question 12

Refer to Craft Construction.Assume Craft uses the percentage-of-completion method for revenue recognition.Prepare all journal entries to record costs,billings,collections and profit recognition.

Accepted Answer

The answer of Refer to Craft Construction.Assume Craft uses the...

Question 13

What are the requirements for a performance obligation to be distinct?

Accepted Answer

A performance obligation is considered d

Question 14

At the beginning of 2017 Premier 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 $12,000,000.Completion is scheduled for the end of 2019.Premier'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.
   Required: Prepare the entries under the completed-contract method for 2017

Accepted Answer

The answer of At the beginning of 2017 Premier Yachts...

Question 15

If a seller does not sell the same goods or services separately,the selling prices should be estimated using prices that maximize observable inputs.What are the three suggested approaches to accomplish this?

Accepted Answer

1.The adjusted market assessme

Question 16

Under the completed-contract method the firm only reports profit in the final year of the contract.

Accepted Answer

A) True 
 B)False

Question 17

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 18

Judgment may be involved in the determination of whether the promise to deliver the good or services or service is separate from other promises.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A) asset 
B) liability 
C) equity 
D) revenue 
A) asset 
B) liability 
C) equity 
D) revenue

Refer to Jones Corporation.Using the expected-value approach the transaction price would be ________.

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.The contract also includes a 12 month service plan.How many performance obligations are included in this transaction?

Refer to Camey Construction.How much gross profit should Camey recognize in Year 1 assuming the use of the percentage of completion method?

An exception to the general rule is that the transaction price should be allocated based on the relative standalone selling prices occurs when the contract includes variable consideration.

For information to be relevant it should have predictive value which is a primary reason to use the completed-contract method.

When a contract fails to meet the collectibility criteria the seller should record any advance payment as a/an ________.

If the sum of standalone selling prices is greater than the transaction price,then any discount to the separate performance obligations should be allocated based on relative ________.

Refer to Craft Construction.Assume Craft uses the percentage-of-completion method for revenue recognition.Prepare all journal entries to record costs,billings,collections and profit recognition.

What are the requirements for a performance obligation to be distinct?

If a seller does not sell the same goods or services separately,the selling prices should be estimated using prices that maximize observable inputs.What are the three suggested approaches to accomplish this?

Under the completed-contract method the firm only reports profit in the final year of the contract.

Judgment may be involved in the determination of whether the promise to deliver the good or services or service is separate from other promises.

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

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

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

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters

Exam 8: Revenue Recognition

Refer to Jones Corporation.Using the expected-value approach the transaction price would be ________.

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.The contract also includes a 12 month service plan.How many performance obligations are included in this transaction?

Refer to Camey Construction.How much gross profit should Camey recognize in Year 1 assuming the use of the percentage of completion method?

An exception to the general rule is that the transaction price should be allocated based on the relative standalone selling prices occurs when the contract includes variable consideration.

For information to be relevant it should have predictive value which is a primary reason to use the completed-contract method.

When a contract fails to meet the collectibility criteria the seller should record any advance payment as a/an ________.

If the sum of standalone selling prices is greater than the transaction price,then any discount to the separate performance obligations should be allocated based on relative ________.

Refer to Craft Construction.Assume Craft uses the percentage-of-completion method for revenue recognition.Prepare all journal entries to record costs,billings,collections and profit recognition.

What are the requirements for a performance obligation to be distinct?

If a seller does not sell the same goods or services separately,the selling prices should be estimated using prices that maximize observable inputs.What are the three suggested approaches to accomplish this?

Under the completed-contract method the firm only reports profit in the final year of the contract.

Judgment may be involved in the determination of whether the promise to deliver the good or services or service is separate from other promises.

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

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

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

OL: Revenue Recognition

Short-Term Operating Assets: Cash and Receivables

Short-Term Operating Assets: Inventory

Long-Term Operating Assets: Acquisition, cost Allocation, and Derecognition

Long-Term Operating Assets: Departures From Historical Cost

Operating Liabilities and Contingencies

OL: Operating Liabilities and Contingencies

Financing Liabilities

Accounting for Stockholders Equity

Investing Assets

Accounting for Income Taxes

Accounting for Employee Compensation and Benefits

Earnings Per Share

Accounting Corrections and Error Analysis

Filters