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Exam 5: Income Measurement

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Question 121

Multiple Choice

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In 2017,Lake would recognize realized gross profit of:

A) $0.
B) $300,000.
C) $310,000.
D) $700,000.

E) C) and D)
F) A) and B)

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Question 122

Multiple Choice

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Under GAAP,with respect to multiple-element arrangements,if the revenue for a particular part of a multiple-element arrangement does not qualify for separate recognition,it is:

A) Never recognized.
B) Recognized when the contract is signed or persuasive evidence of an arrangement exists.
C) Recognized when revenue for the other parts is recognized.
D) Recognized at the end of the contract.

E) A) and D)
F) A) and B)

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Question 123

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"Determine whether it is probable the seller will collect the consideration it is entitled to receive" is one of the five steps to applying the core revenue recognition principle.

Summary data for Benedict Construction Co.'s (BCC)Job 1227,which was completed in 2016,are presented below: Assuming BCC used the cost recovery method to recognize revenue under IFRS,what would gross profit have been in 2015 and 2016 (rounded to the nearest thousand)?

"VSOE" stands for:

An option for a customer to purchase additional goods at a discount from list price is only a performance obligation if the discount is a material right that the customer would not receive otherwise.

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

If a license is acquired to use intellectual property for a 5-year period,revenue always is recognized at the point in time the customer begins to benefit from the license.

No allocation of contract price is required if the transaction involves multiple performance obligations that are satisfied at different points in time.

Prepare Veras' June 30 journal entry to account for the revenue earned from June 1 - June 30,as well as any necessary adjustments to revenue presumed to have been previously recorded.

What were the construction billings by CCC during 2016?

When the cost recovery method is used to account for a long-term construction contract under IFRS,an equal amount of cost and revenue is typically recognized during the early life of the contract,such that high initial gross profit is recognized in net income.

Total cash collections on installment sales during 2016 would be:

Use the following to answer questions Excerpts from Dowling Company's December 31,2016 and 2015,financial statements and key ratios are presented below (all numbers are in millions) : -Dowling's return on equity for 2016 is (rounded) :

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

Briefly explain how gross profit is recorded when revenue on long-term construction projects is recognized over time according to percentage of completion.

A common output method used to measure progress towards completion is to compare cost incurred to date to total costs estimated to complete the job.

The following information is provided in the 2016 annual report to shareholders of paris-perfume.com: Required: Compute the missing amount in the paris-perfume.com financial statement information,and indicate your answers by marking them (A)to (G).

Baldi Piano manufactures customized pianos for concert halls.On July 1,2016,Baldi signed a contract to deliver a concert piano for $150,000.Under the contract,Baldi is also obligated to provide a one-year maintenance service.If sold separately,the piano and the maintenance service would have cost $140,000 and $20,000,respectively. Required: How much of the transaction price would be allocated to the piano and the maintenance service,assuming they are separate performance obligations? Show your work.

If the estimate of a transaction price is revised,the price change is allocated entirely to the remaining performance obligations that are yet to be satisfied.