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
Homework Answers
| False, Using the most likely amount the transaction price associated with highest probability is taken into account. |
| Using expected value approach, the probability of each possible amount is multiplied by the possible amount to get an expected contract price. |
| False is the correct option |
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o account for variable consideration using the most likely
amount, the probability of each possible amount...
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance...
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance in implementing various cost savings initiatives. Thomas's contract specifies that it will receive a flat fee of $66,000 and an additional $36,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the...
In determining the estimated transaction price, variable consideration may sometimes need to be considered. One method...
In determining the estimated transaction price, variable consideration may sometimes need to be considered. One method is probability-weighted expected value, the other is most-likely. Provide examples of when each might be used.
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance...
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance in implementing various cost savings initiatives. Thomas's contract specifies that it will receive a flat fee of $69.000 and an additional $39.000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost savings target Skiped Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration calculate...
White Labs is a wholesaler who sells microscopes for use in high schools to retailers. On...
White Labs is a wholesaler who sells microscopes for use in high schools to retailers. On August 1 White contracts with the XYZ to sell 1,000 microscopes to XYZ to be delivered September 1. The contract price is set at $370 each, with a 10% volume discount if sales exceed 2,500 microscopes within the year. The probability of sales exceeding 2,500 microscopes is expected to be 55%. Ignore any constraints on variable consideration. Using the most-likely-amount approach, the consideration to...
Labs is a wholesaler who sells microscopes for use in high schools to retailers. On August...
Labs is a wholesaler who sells microscopes for use in high schools to retailers. On August 1 White contracts with the XYZ o sell 1.000 microscopes to XYZ to be del vered September 1 The contract price 's set at $370 each with a 10% v unt if sales exceed 2 500 microscopes within the year. The probability o sales exceeding 2,500 microscopes is expected to be 55%. Ignore any constraints on variable consideration. Using the most likely amount approach,...
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months...
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev used the most likely amount to determine transaction price. After Sanjeev has recognized revenue for two months of the contract, he changes his assessment of the chance the contract will pay him $3000 up to 70%. How much revenue would...
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months...
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev used the most likely amount to determine transaction price. After Sanjeev has recognized revenue for two months of the contract, he changes his assessment of the chance the contract will pay him $3000 up to 70%. How much revenue would...
journal entries for 1 and 2 Exercise 6-10 (Algo) Variable consideration - most likely amount; change in estimate...
journal entries for 1 and 2
Exercise 6-10 (Algo) Variable consideration - most likely amount; change in estimate (L06-3, 6-6) Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1.400 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $140 bonus per tour day it guided during the previous month if its service during...
Question Help Gray Uniforms is a wholesaler who sells school uniforms to retailers. On August 1,...
Question Help Gray Uniforms is a wholesaler who sells school uniforms to retailers. On August 1, Gray contracts with Excel School Uniforms to sell 2,000 uniforms to Excel to be delivered September 1. The contract price is set at $390 each. The contract provides for a 10% volume discount if sales exceed 3,000 uniforms. The probability of sales exceeding 3,000 uniforms is expected to be 63%. Using the most likely - amount approach, the consideration is estimated to be O...
BE8-8. Estimating Variable Consideration. Sellet Billboard Company entered into an agreement to display bill. board advertising...
BE8-8. Estimating Variable Consideration. Sellet Billboard Company entered into an agreement to display bill. board advertising for Wynne Incorporated for 10 months for a $60,000 fixed fee. The agreement also includes a potential bonus based on certain goals. Sellet believes the following probability estimates on receiving a bonus are accurate: Expected bonuss 1600 20% = Bonus Probability $8,000 $6,000 - 58% - 3,980 580 $4,000 > 17% = 680 $2,000 5% = 100 What approach should Sellet use to estimate...
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance in implementing various cost savings initiatives. Thomas's contract specifies that it will receive a flat fee of $66,000 and an additional $36,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost savings target. Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration, calculate the...
Exercise 6-9 (Algo) Variable consideration; estimation and constraint (LO6-6) Thomas Consultants provided Bran Construction with assistance in implementing various cost savings initiatives. Thomas's contract specifies that it will receive a flat fee of $69.000 and an additional $39.000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 25% chance that Bran will achieve the cost savings target Skiped Required: 1. Assuming Thomas uses the expected value as its estimate of variable consideration calculate...
White Labs is a wholesaler who sells microscopes for use in high schools to retailers. On August 1 White contracts with the XYZ to sell 1,000 microscopes to XYZ to be delivered September 1. The contract price is set at $370 each, with a 10% volume discount if sales exceed 2,500 microscopes within the year. The probability of sales exceeding 2,500 microscopes is expected to be 55%. Ignore any constraints on variable consideration. Using the most-likely-amount approach, the consideration to...
Labs is a wholesaler who sells microscopes for use in high schools to retailers. On August 1 White contracts with the XYZ o sell 1.000 microscopes to XYZ to be del vered September 1 The contract price 's set at $370 each with a 10% v unt if sales exceed 2 500 microscopes within the year. The probability o sales exceeding 2,500 microscopes is expected to be 55%. Ignore any constraints on variable consideration. Using the most likely amount approach,...
journal entries for 1 and 2
Exercise 6-10 (Algo) Variable consideration - most likely amount; change in estimate (L06-3, 6-6) Rocky Guide Service provides guided 1-5 day hiking tours throughout the Rocky Mountains. Wilderness Tours hires Rocky to lead various tours that Wilderness sells. Rocky receives $1.400 per tour day, and shortly after the end of each month Rocky learns whether it will receive a $140 bonus per tour day it guided during the previous month if its service during...
Question Help Gray Uniforms is a wholesaler who sells school uniforms to retailers. On August 1, Gray contracts with Excel School Uniforms to sell 2,000 uniforms to Excel to be delivered September 1. The contract price is set at $390 each. The contract provides for a 10% volume discount if sales exceed 3,000 uniforms. The probability of sales exceeding 3,000 uniforms is expected to be 63%. Using the most likely - amount approach, the consideration is estimated to be O...
BE8-8. Estimating Variable Consideration. Sellet Billboard Company entered into an agreement to display bill. board advertising for Wynne Incorporated for 10 months for a $60,000 fixed fee. The agreement also includes a potential bonus based on certain goals. Sellet believes the following probability estimates on receiving a bonus are accurate: Expected bonuss 1600 20% = Bonus Probability $8,000 $6,000 - 58% - 3,980 580 $4,000 > 17% = 680 $2,000 5% = 100 What approach should Sellet use to estimate...
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