Question 1

Prepare Veras' January 31 journal entry to account for the revenue earned from January 1 - January 31.

Accepted Answer

In January,Veras estimates a greater tha

Question 2

On February 12,2016,Mohawk Home and Garden enters into contract with a local business to provide weekly grass-cutting services between May and September of that year,and receives $2,000 in advance.As part of a local business promotion,Mohawk offers a 50% discount on any barbecue grill with a list price in excess of $200.In the past,Mohawk charged the same amount ($2,000)for the same weekly grass-cutting service,but without the grill discount coupon.Based on historical experience with other clients,Mohawk estimates that about 40% of the coupons will be redeemed,purchasing grills with an average total list price of $400.
Required:
(a)How many performance obligations are in this contract? Explain the reasons for your answer.
(b)Prepare the journal entry to account for the transaction as of February 12,2016,clearly identifying the revenue or deferred revenue associated with each performance obligation.

Accepted Answer

(a)Number of performance obligations in

Question 3

At December 31,2017,Rigsby would report in its balance sheet:

Accepted Answer

A) Realized gross profit of $500,000. 
B) Deferred gross profit of $400,000. 
C) Realized gross profit of $400,000. 
D) Cost of installment sales $1,600,000. 
A) Realized gross profit of $500,000. 
B) Deferred gross profit of $400,000. 
C) Realized gross profit of $400,000. 
D) Cost of installment sales $1,600,000.

Question 4

Assume Sanjeev estimates variable consideration as the expected value.What is the amount of revenue Sanjeev would recognize for the first month of the contract?

Accepted Answer

A) $1,000 
B) $1,333 
C) $1,400 
D) $1,200 
A) $1,000 
B) $1,333 
C) $1,400 
D) $1,200

Question 5

When using the cost recovery method of accounting for long-term construction contracts under IFRS,early in the life of the contract it is typically the case that:

Accepted Answer

A) Expenses in excess of revenues are recognized. 
B) Revenues in excess of expenses are recognized. 
C) An equal amount of revenue and expense is recognized. 
D) There is no predictable pattern of revenue and expense. 
A) Expenses in excess of revenues are recognized. 
B) Revenues in excess of expenses are recognized. 
C) An equal amount of revenue and expense is recognized. 
D) There is no predictable pattern of revenue and expense.

Question 6

Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured,the journal entry required at signing would include a credit to:

Accepted Answer

A) Unearned franchise fee revenue for $36,000. 
B) Unearned franchise fee revenue for $30,000. 
C) Franchise fee revenue for $36,000. 
D) Franchise fee revenue for $ 6,000. 
A) Unearned franchise fee revenue for $36,000. 
B) Unearned franchise fee revenue for $30,000. 
C) Franchise fee revenue for $36,000. 
D) Franchise fee revenue for $ 6,000.

Question 7

Bert's Meat Market sells quarters and sides of beef on the installment basis.Losses on receivables are very difficult to predict,and meat products cannot be repossessed.The revenue recognition method used by Bert would be:

Accepted Answer

A) Point of sale. 
B) Installment sales. 
C) Cost recovery. 
D) Installment sales or cost recovery. 
A) Point of sale. 
B) Installment sales. 
C) Cost recovery. 
D) Installment sales or cost recovery.

Question 8

Lexikon Pianos sells customized concert pianos throughout the U.S.Its grand concert piano sells for $200,000,which includes delivery and installation.The product comes with a two-year warranty that covers any product defects,and customers can choose to add an extended three-year warranty for maintenance and repair at a price of $2,000.Customers also get an option to upgrade traditional plastic keys to bone ones for an additional $20,000.The extended warranty would normally sell for $3,500,and the installation of bone keys carries a standalone price of $30,000.
Required:
(a)Given the information above,how many performance obligations exist in the contract to purchase a grand concert piano?
(b)Now,assume that the standalone price of the extended warranty is $2,000,and that of the bone key upgrade is $20,000.How many performance obligations exist in the contract to purchase a grand concert piano?

Accepted Answer

(a)In total,there are three performance

Question 9

Prepare the journal entry to recognize the sale of a new membership.Clearly identify revenue or deferred revenue associated with each performance obligation.

Accepted Answer

Since the discount coupon would be a per

Question 10

In 2017,JRE2 would report (rounded to the nearest thousand)gross profit (loss)of:

Accepted Answer

A) $(100,000). 
B) $50,000. 
C) $123,000. 
D) $2,000. 
A) $(100,000). 
B) $50,000. 
C) $123,000. 
D) $2,000.

Question 11

Revenue is not recognized under the realization principle unless the earnings process is complete or virtually complete and there is reasonable certainty about the expected collection of the asset received.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is not true?

Accepted Answer

A) Licensing fees are recognized as revenue over time for any licenses for which the seller expects its ongoing activities to affect the benefits that the buyer receives from intellectual property. 
B) License fees are recognized over time for any license that is viewed as providing a right of access. 
C) License fees are recognized as revenue at a point in time if the buyer expects that the seller's future activities will not affect the benefit the buyer derives from the intellectual property. 
D) Licensing fees are recognized as revenue at the end of the license period,when the seller has completed its performance obligation to provide access to its intellectual property. 
A) Licensing fees are recognized as revenue over time for any licenses for which the seller expects its ongoing activities to affect the benefits that the buyer receives from intellectual property. 
B) License fees are recognized over time for any license that is viewed as providing a right of access. 
C) License fees are recognized as revenue at a point in time if the buyer expects that the seller's future activities will not affect the benefit the buyer derives from the intellectual property. 
D) Licensing fees are recognized as revenue at the end of the license period,when the seller has completed its performance obligation to provide access to its intellectual property.

Question 13

Sullivan should recognize revenue for the two parts of the arrangement as follows:

Accepted Answer

A) Recognize the entire $500 when the customer pays cash to buy the package. 
B) Recognize the portion of the $500 attributable to the software program when the customer pays cash to buy the package;defer the portion attributable to technical support and recognize over the support period. 
C) Defer the entire $500 and recognize over the support period. 
D) Recognize the entire $500 upon conclusion of the support period. 
A) Recognize the entire $500 when the customer pays cash to buy the package. 
B) Recognize the portion of the $500 attributable to the software program when the customer pays cash to buy the package;defer the portion attributable to technical support and recognize over the support period. 
C) Defer the entire $500 and recognize over the support period. 
D) Recognize the entire $500 upon conclusion of the support period.

Question 14

Use the following to answer questions 
Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,800,000.The project was begun in 2015 and completed in 2016.Cost and other data are presented below:
  
-Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.Required: Compute the amount of gross profit recognized during 2015 and 2016.

Accepted Answer

The answer of Use the following to answer questions 
Beavis...

Question 15

Assume that at the time of signing the contract,collection of the receivable was assured and that service obligations were substantial.However,by October 20,2015,substantially all continuing obligations had been met.The journal entry required at October 20,2015 would include a:

Accepted Answer

A) Credit to franchise fee receivable for $27,000. 
B) Debit to unearned franchise fee revenue for $36,000. 
C) Credit to franchise fee revenue for $9,000. 
D) Debit to unearned franchise fee revenue for $27,000. 
A) Credit to franchise fee receivable for $27,000. 
B) Debit to unearned franchise fee revenue for $36,000. 
C) Credit to franchise fee revenue for $9,000. 
D) Debit to unearned franchise fee revenue for $27,000.

Question 16

A contract exists for purposes of revenue recognition if either the seller or customer has performed an obligation specified by the contract.

Accepted Answer

A) True 
 B)False

Question 17

Revenue always is recognized once the buyer has physical possession of goods.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not true about contract assets?

Accepted Answer

A) Contract assets are recorded when payment depends on something other than the passage of time. 
B) Contract assets are recognized when the seller has a conditional right to receive payment. 
C) Contract assets are recognized when the seller has been paid in advance for at least partially fulfilling its performance obligations. 
D) Contract assets are not the same as accounts receivable. 
A) Contract assets are recorded when payment depends on something other than the passage of time. 
B) Contract assets are recognized when the seller has a conditional right to receive payment. 
C) Contract assets are recognized when the seller has been paid in advance for at least partially fulfilling its performance obligations. 
D) Contract assets are not the same as accounts receivable.

Question 19

Use the following to answer questions 
The following table presents a summary of ratio analysis for Uncle Joe's Coffee,based on the most recent 12 months and five-year comparisons of Uncle Joe's with averages in the restaurant industry and the services sector,respectively.
  
-Using the information provided above,briefly summarize the operating performance of Uncle Joe's relative to its benchmark competitors.

Accepted Answer

Uncle Joe's shows efficient management o

Question 20

Estimate the stand-alone selling price of the software using the residual approach.

Accepted Answer

A) $50 
B) $80 
C) $90 
D) $97.50 
A) $50 
B) $80 
C) $90 
D) $97.50

Prepare Veras' January 31 journal entry to account for the revenue earned from January 1 - January 31.

At December 31,2017,Rigsby would report in its balance sheet:

Assume Sanjeev estimates variable consideration as the expected value.What is the amount of revenue Sanjeev would recognize for the first month of the contract?

When using the cost recovery method of accounting for long-term construction contracts under IFRS,early in the life of the contract it is typically the case that:

Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured,the journal entry required at signing would include a credit to:

Bert's Meat Market sells quarters and sides of beef on the installment basis.Losses on receivables are very difficult to predict,and meat products cannot be repossessed.The revenue recognition method used by Bert would be:

Prepare the journal entry to recognize the sale of a new membership.Clearly identify revenue or deferred revenue associated with each performance obligation.

In 2017,JRE2 would report (rounded to the nearest thousand)gross profit (loss)of:

Revenue is not recognized under the realization principle unless the earnings process is complete or virtually complete and there is reasonable certainty about the expected collection of the asset received.

Which of the following is not true?

Sullivan should recognize revenue for the two parts of the arrangement as follows:

Assume that at the time of signing the contract,collection of the receivable was assured and that service obligations were substantial.However,by October 20,2015,substantially all continuing obligations had been met.The journal entry required at October 20,2015 would include a:

A contract exists for purposes of revenue recognition if either the seller or customer has performed an obligation specified by the contract.

Revenue always is recognized once the buyer has physical possession of goods.

Which of the following is not true about contract assets?

Estimate the stand-alone selling price of the software using the residual approach.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters

Exam 5: Income Measurement

Prepare Veras' January 31 journal entry to account for the revenue earned from January 1 - January 31.

At December 31,2017,Rigsby would report in its balance sheet:

Assume Sanjeev estimates variable consideration as the expected value.What is the amount of revenue Sanjeev would recognize for the first month of the contract?

When using the cost recovery method of accounting for long-term construction contracts under IFRS,early in the life of the contract it is typically the case that:

Assuming that the initial services to be performed by Flapper Jack's subsequent to the signing are substantial and that collection of the receivable is reasonably assured,the journal entry required at signing would include a credit to:

Bert's Meat Market sells quarters and sides of beef on the installment basis.Losses on receivables are very difficult to predict,and meat products cannot be repossessed.The revenue recognition method used by Bert would be:

Prepare the journal entry to recognize the sale of a new membership.Clearly identify revenue or deferred revenue associated with each performance obligation.

In 2017,JRE2 would report (rounded to the nearest thousand)gross profit (loss)of:

Revenue is not recognized under the realization principle unless the earnings process is complete or virtually complete and there is reasonable certainty about the expected collection of the asset received.

Which of the following is not true?

Sullivan should recognize revenue for the two parts of the arrangement as follows:

Assume that at the time of signing the contract,collection of the receivable was assured and that service obligations were substantial.However,by October 20,2015,substantially all continuing obligations had been met.The journal entry required at October 20,2015 would include a:

A contract exists for purposes of revenue recognition if either the seller or customer has performed an obligation specified by the contract.

Revenue always is recognized once the buyer has physical possession of goods.

Which of the following is not true about contract assets?

Estimate the stand-alone selling price of the software using the residual approach.

Environment and Theoretical Structure of Financial Accounting

Review of the Accounting Process

The Balance Sheet and Financial Disclosures

The Income Statement, comprehensive Income, and the Statement of Cash Flows

Time Value of Money Concepts

Cash and Receivables

Inventories: Measurement

Inventories: Additional Issues

Property, plant, and Equipment and Intangible Assets: Acquisition and Disposition

Property, plant, and Equipment and Intangible Assets: Utilization and Impairment

Investments

Current Liabilities and Contingencies

Bonds and Long-Term Notes

Leases

Accounting for Income Taxes

Pensions and Other Postretirement Benefits

Shareholders Equity

Share-Based Compensation and Earnings Per Share

Accounting Changes

The Statement of Cash Flows

Filters