Exam 5: Income Measurement

Prepare Portelli's June 30 and July 2 journal entries to record additional service revenue earned,as well as any necessary adjustments to revenue and receipt of payment from Silvia.

When a long-term contract does not qualify for revenue recognition over time,all gross profit and loss recognition occurs when the contract is completed.

Beck Construction Company began work on a new building project on January 1,2015.The project is to be completed by December 31,2017,for a fixed price of $108 million.The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Required: What amount of gross profit (or loss)would Beck record on this project in each year,assuming that Beck recognizes revenue for this project over time according to percentage of completion? Place answers in the spaces provided below and show supporting computations.

Which one of the following is not one of the five steps for recognizing revenue?

In 2016,KP Building Inc.began work on a four-year construction project (called Cincy One).The contract price is $300 million.KP recognizes revenue on this contract over time according to percentage of completion.At the end of 2016,the following financial statement information indicates the results to date for Cincy One: Required: Compute the following,placing your answer in the spaces provided and showing supporting computations below.

Use the following to answer questions The following partial income statement and balance sheet information (in $ millions)comes from the Annual Report of Saratoga Springs Co.for the year ending 12/31/2016: Required: Compute the following amounts for Saratoga Springs Co. -Its profit margin on sales for 2016.Round your answer to one decimal place,e.g. ,.1234 as 12.3%.

Which of the following is an example of a variable consideration?

Typically,if Beaumont were to sell the equipment only,it would ask for $2,000.Required: Assuming that the diving equipment and the certification lessons are separate performance obligations,estimate the stand-alone selling price of the lessons based on the residual approach.

Assume that Emmet accrues revenue each month,and estimates variable consideration as the most likely amount.On November 1,Emmet revises its estimate of the chance the building will exceed the 90% occupancy threshold to a 70% chance.What is the total amount of revenue Emmet should recognize on this contract in November of 2016?

Under IFRS,firms have free choice as to whether they use the percentage-of-completion method or the cost recovery method to account for a long-term construction contract.

Revenue on a multiple-element contract typically is allocated to independent parts of the contract based on their relative selling prices.

What is the amount of gross profit on the project recognized by CCC during 2016?

Assuming BCC recognizes revenue over time according to percentage of completion for this contract,the gross profit recognized in 2015 would be (rounded to the nearest thousand):

Explodia.com sells fireworks over the Internet.Customers access Explodia's website and select particular products,and Explodia refers the customer order to a fireworks manufacturer who fulfills the order,ships to the customer,and pays Explodia a 20% commission.Which of the following is true about Explodia?

The transaction price should be adjusted to reflect the time value of money for interest payable,but not for interest receivable.

Use the following to answer questions Missoula Inc.reported the following selected financial statement data: -Required: Compute the return on assets for 2016.

Indiana:

Suppose that,in 2017,Indiana incurred additional costs of $63.75 million and estimated an additional $42.75 million in costs to complete the project.Indiana:

In 2015,Lake would recognize realized gross profit of:

Disclosure notes to the financial statements regarding significant revenue recognition policies are only required when they will not reveal important information to competitors,suppliers or customers.