Exam 5: Income Measurement

Assuming BCC recognizes revenue over time according to percentage of completion for this contract,the gross profit recognized in 2016 would be (rounded to the nearest thousand):

For long-term construction contracts,the cost recovery method under IFRS requires recognizing equal amounts of revenue and cost until all costs are recovered.

A contract between a seller and a buyer need not be in writing to be enforceable.

Pita Pal sells fast-food franchises.Pita Pal receives $75,000 from a new franchisee for providing initial training,equipment,and furnishings that together have a stand-alone selling price of $75,000.Pita Pal also receives $36,000 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased).Rachel became a Pita Pal franchisee on March 1,2016,and on May 1,2016 Rachel had completed training and was open for business.How much revenue in 2016 will Pita Pal recognize for its arrangement with Rachel?

Hulkster's 2016 return on assets is (rounded):

What is the expected transaction price with variable consideration estimated as the expected value?

Which of the following is typically true for a bill-and-hold arrangement?

The transaction price is only allocated to goods and services that are both capable of being distinct and that are separately identifiable.

Use the following to answer questions Missoula Inc.reported the following selected financial statement data: -Required: Compute the return on shareholders' equity for 2016.Round your answer to one decimal place,e.g. ,.1234 as 12.3%.

Assume that the scales,software and calibration service are all separate performance obligations.How much revenue will Ortiz recognize in 2016 for this contract?

If a seller makes payments to a customer to purchase goods and services,and those payments are equal to the stand-alone selling prices of those goods and services,part of those payments are a refund to the customer.

If the seller is a principal,the seller has primary responsibility for delivering a product or service.

In 2015,Lake would recognize realized gross profit of:

In its 2016 year-end balance sheet,Reliable would report installment receivables (net)of:

The right of return is a separate performance obligation,and a portion of the transaction price needs to be allocated to it for revenue recognition.

Accounting for quality-assurance warranties includes a credit to warranty expense and a debit to contingent liability.

Use the following to answer questions The following table presents a summary of ratio analysis for McDonald's and averages for their peer group: -Using the information provided above,use the DuPont framework to briefly summarize the operating performance of McDonald's relative to its benchmark competitors.

With respect to delaying revenue recognition until completion of a long-term contract,it is the case that:

Companies always recognize revenue when goods or services are transferred to customers for the amount the company expects to receive in exchange for those goods or services.

When recognizing revenue over time on a long-term contract,the percent complete is often estimated by comparing the cost incurred to date with the total estimated cost to complete.