Homework Answers
Answer for the above multiple choice question is:
B. TRANSACTION PRICE
Transaction price is the amount that an entity expects to be entitled as a result of providing goods or services to customer.
Transaction price is readily available as the customer agrees to pay a fixed price of the goods or services that he intends to buy from the dealer.
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The amount of consideration an entity expects to be entitled to as a result of providing...
Exercise 15.3 State whether each of the following is true or false. 1. Revenue is measured...
Exercise 15.3 State whether each of the following is true or false. 1. Revenue is measured at the fair value of the consideration given by the seller. 2. Revenue is measured at the transaction price that is allocated to that performance obligation. 3. If payment for the goods or services is deferred, the fair value of the consideration will be less than the nominal amount of the cash receivable. 4. A swap or exchange for goods or services of a...
Larkspur Inc. has a customer loyalty program that rewards a customer with one customer loyalty point...
Larkspur Inc. has a customer loyalty program that rewards a customer with one customer loyalty point for every $100 of purchases. Each point is redeemable for a $3 discount on any future purchases. On July 2, 2020, customers purchase products for $294,000 (with a cost of $167,580) and earn 2,940 points redeemable for future purchases. Larkspur expects 2,450 points to be redeemed (based on its past experience, which is predictive of the amount of consideration to which it will be...
The term, "realization," in revenue recognition refers to which of the following? The entity has completed,...
The term, "realization," in revenue recognition refers to which of the following? The entity has completed, or substantially completed, the activities it must perform to be entitled to the revenue benefits. The product or service has been exchanged for cash, claims to cash, or an asset that is readily convertible to a known amount of cash or claims to cash. The entity has received an irrevocable order for goods or services. Cash has been received with an irrevocable order for...
When does a company satisfy a performance obligation? Select one: a. When you receive full payment...
When does a company satisfy a performance obligation? Select one: a. When you receive full payment from customers for the goods or services you sold. b. When you transfer control of the goods or services to your customers. c. When the monetary amount (price or amount) of the transaction or contract is determined. d. From the moment you receive a partial payment in exchange for goods or services.
Henderson Farms Inc. sells land to Harris Development Corporation for $2,000,000 It is also entitled to...
Henderson Farms Inc. sells land to Harris Development Corporation for $2,000,000 It is also entitled to receive 6% of any future sales price of the developed land in excess of $5 million. Henderson Farms Inc. determines that its experience with similar contracts is of little predictive value, because the future performance of the real estate market will cause the amount of variable consideration to be highly susceptible to factors outside of the company’s influence. Additionally, the uncertainty is not expected...
Variable Consideration Henderson Farms Inc. sells land to Harris Development Corporation for $2,000,000 It is also...
Variable Consideration Henderson Farms Inc. sells land to Harris Development Corporation for $2,000,000 It is also entitled to receive 6% of any future sales price of the developed land in excess of $5 million. Henderson Farms Inc. determines that its experience with similar contracts is of little predictive value, because the future performance of the real estate market will cause the amount of variable consideration to be highly susceptible to factors outside of the company’s influence. Additionally, the uncertainty is...
The general principle of income recognition establishes that companies recognize income when Select one: a. Control...
The general principle of income recognition establishes that companies recognize income when Select one: a. Control of the goods or services is transferred to customers for the amount that the company expects to be entitled to receive in exchange for those goods or services. b. goods or services are transferred to the customer and payment is received. c. the goods or services are transferred to the customer in a transaction between related parties. d. the earnings process is nearly complete...
o account for variable consideration using the most likely amount, the probability of each possible amount...
o account for variable consideration using the most likely amount, the probability of each possible amount is multiplied by the possible amount to get an expected contract price. True or False
CA Question 4 The transaction price O excludes time value of money if the contract involves...
CA Question 4 The transaction price O excludes time value of money if the contract involves a significant financing component. O does not consider noncash consideration such as donations, gifts, equipment or labor. O excludes discounts, volume rebates, coupons and free products, or services. O is the amount of consideration that a company expects to receive from a customer.
Question 1 When organisations sell various goods to customers there is often some uncertainty abo...
Question 1 When organisations sell various goods to customers there is often some uncertainty about the ultimate collectability of the transaction price. Should sales revenue be reduced to take into account the probability that a certain percentage of the sales revenue will never be collected? Question 2 If an entity is performing its responsibilities under a contract to a customer in a manner where the performance obligations are being satisfied 'over time' (rather than at a 'point in time), then...
Exercise 15.3 State whether each of the following is true or false. 1. Revenue is measured at the fair value of the consideration given by the seller. 2. Revenue is measured at the transaction price that is allocated to that performance obligation. 3. If payment for the goods or services is deferred, the fair value of the consideration will be less than the nominal amount of the cash receivable. 4. A swap or exchange for goods or services of a...
CA Question 4 The transaction price O excludes time value of money if the contract involves a significant financing component. O does not consider noncash consideration such as donations, gifts, equipment or labor. O excludes discounts, volume rebates, coupons and free products, or services. O is the amount of consideration that a company expects to receive from a customer.
Question 1 When organisations sell various goods to customers there is often some uncertainty about the ultimate collectability of the transaction price. Should sales revenue be reduced to take into account the probability that a certain percentage of the sales revenue will never be collected? Question 2 If an entity is performing its responsibilities under a contract to a customer in a manner where the performance obligations are being satisfied 'over time' (rather than at a 'point in time), then...
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