Exam 8: Revenue Recognition

ABC Company is holding goods with a selling price of $100,000 which cost them $60,000.On December 3,2017,ABC sold the goods to Timmons under a bill-and-hold arrangement.At the end of 2017 ABC still holds the goods.How much revenue should ABC recognize for 2017?

Gleason Construction enters into a long-term fixed price contract to build an office building for $20,000,000.In the first year of the contract Gleason incurs $6,000,000 of cost and the engineers determined that the remaining costs to complete are $10,000,000.How much gross profit or loss should Gleason recognize in Year 1 assuming the use of the percentage-of-completion method?

Refer to Tullis Corporation.How much gross profit should Tullis recognize in Year 1 assuming the use of the completed-contract method?

Which one of the following is not an indicator of a consignment arrangement?

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

Companies provide information in one major area with regard to revenues and that is information about its contracts with customers.

The Billings on Construction in Progress is a/an ________.

When a contract is expected to affect the risk,timing,or amount of the entity's future cash flows,the contract is said to have ________.

U.S.GAAP sets a higher threshold for the assessment of collectibility.

Refer to Greenwell Farms.How much interest revenue will Greenwell report over the life of this contract?

Companies may choose the method used to disaggregate revenues.

Brutus Construction started work on a new high rise building on January 1,2016,The project completion date is December 2018.The contract price is $54,000,000.The following are the actual costs incurred and estimates of cost to complete the project. Calculate gross profit or loss for each year using the completed-contract method.

Refer to Jones Corporation.Upon collection of the upfront fee,Jones would recognize a/an ________.

Walker Consulting helped McCall Roofers put various cost saving techniques into place.The contract specifies that Walker will receive a flat fee of $60,000 and an additional $15,000 if McCall attains a target amount of cost savings.Walker estimates a 20% chance that McCall will reach the target for cost savings.Assuming that Walker uses the expected-value approach,what is the transaction price for this product?

The first step in the revenue recognition process is to determine the transaction price.

The Construction in Progress account is what type of account?

Hepner Products enters into a contract with Tullis to sell three different products.The total price is $365,000.Each of the products is a separate performance obligation.Based on the information presented in the table,what is the standalone price of product Z using the residual approach?

Refer to Camey Corporation.How much gross profit should Camey recognize in Year 1 assuming the use of the completed-contract method?

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

A yacht dealer sells high performance yachts to affluent customers.The sale also includes a 90 day warranty against any defects in workmanship.The number of performance obligations for each yacht is ________.