Which of the following is an input method for recognizing revenue over time? a. units-produced method...

Which of the following is an input method for recognizing revenue over time?

a.

units-produced method

b.

milestones-reached method

c.

cost-to-cost method

d.

results-achieved method

Expert Solution

Correct answer---------(c) cost-to-cost method.

.

In cost-to-cost method the revenues is recognized over time using percentage of completion. Total cost incurred is divided by total estimated cost to be incurred to calculate the % completed and then gross profit as well as revenue is recognized.

See the below chart for better understanding

		2021	2022
A	Contract Price	$ 10,000,000	$ 10,000,000
B	Cost Incurred to Date	$ 2,542,000	$ 6,352,000
C	Estimated cost yet to be incurred to complete the contract	$ 5,658,000	$ 0
D = B+C	Total Cost	$ 8,200,000	$ 6,352,000
E = (D/B) x 100	% of Completion	31%	100%

F = A x E	Revenue to date	$ 3,100,000	$ 10,000,000
G	Revenue of Previous year	$ 0	$ 3,100,000
H = F - G	Net Revenue this year	$ 3,100,000	$ 6,900,000

I	Cost to date	$ 2,542,000	$ 6,352,000
J	Cost to date of previous year	$ 0	$ 2,542,000
K = I - J	Net Cost for the year	$ 2,542,000	$ 3,810,000

L = H - K	Gross Profits	$ 558,000	$ 3,090,000

ekkarill92 answered 3 years ago

Which of the following is not a direct measure of productivity: Input/Time Units produced / Labor...

Which of the following is not a direct measure of productivity: Input/Time Units produced / Labor hours Output/Capital Output/Materials Output/Time

Which one of the following is not a recognized method of recognizing assets as expenses in...

Which one of the following is not a recognized method of recognizing assets as expenses in a particular accounting period? Customers’ account balances in accounts receivable are assigned to expense in the period in which each customer pays. Prepaid insurance is assigned to expense as the insurance expires. A building is depreciated and its cost is assigned to the current and future accounting periods in which the building is expected to be used. Merchandise inventory is assigned to cost of...

At the beginning of 2017, Swifty Construction Company changed from the completed-contract method to recognizing revenue...

At the beginning of 2017, Swifty Construction Company changed from the completed-contract method to recognizing revenue over time (percentage-of-completion) for financial reporting purposes. The company will continue to use the completed-contract method for tax purposes. For years prior to 2017, pretax income under the two methods was as follows: percentage-of-completion $114,600, and completed-contract $84,000. The tax rate is 40%. Swifty has a profit-sharing plan, which pays all employees a bonus at year-end based on 2% of pretax income. Compute the...

Because each industry typically has a different method for recognizing income, revenue recognition is one of...

Because each industry typically has a different method for recognizing income, revenue recognition is one of the most difficult tasks for accountants, as it involves a number of ethical dilemmas related to income reporting. To provide an industry-wide approach, Accounting Standards Update No. 2014-09 and other related updates were implemented to clarify revenue recognition rules. The American Institute of Certified Public Accountants (AICPA) announced that these updates would replace U.S. GAAP’s current industry-specific revenue recognition practices with a principle-based approach,...

Which of the following items is an explicit transaction? Recognizing expense as equipment is used Recognizing...

Which of the following items is an explicit transaction? Recognizing expense as equipment is used Recognizing the revenue for inventory sold Recognizing expense for prepaid insurance consumption Accruing for audit fees at the end of the year

Which of the following methods of recognizing income is most recommended? a. Billings method b. Percentage-of-Completion...

Which of the following methods of recognizing income is most recommended? a. Billings method b. Percentage-of-Completion method

Microsoft historically followed the practice of recognizing 25% of revenue from its Windows software over three...

Microsoft historically followed the practice of recognizing 25% of revenue from its Windows software over three or four years as it promises future upgrades and addons. With the launch of Vista in 2008, it changed the policy to record most of the revenue in the period in which the software was sold. In the third quarter for fiscal year 2008, Microsoft reported an increase in earnings of 65%. The increase came from sales of the new Vista program and also...

A forecasting method has produced the following over the past five months. What is the mean...

A forecasting method has produced the following over the past five months. What is the mean absolute percent error? Month Actual Forecast 1 102 110 2 120 116 3 125 120 4 110 120 5 100 113

Assuming the number of units sold and produced are the same, which of the following statements...

Assuming the number of units sold and produced are the same, which of the following statements is true when comparing net income using absorption and direct costing? a. Absorption costing will yield a higher net income. b. Direct costing will yield a higher net income. c. Net income will be the same under both methods. d. Direct costing will have higher sales revenue. 9. Assuming that the number of units produced is greater than the number of units sold, which of...

In service companies, revenue is recognized either at a point in time, or over time. Compare...

In service companies, revenue is recognized either at a point in time, or over time. Compare and contrast the rules for recognizing revenue under these two circumstances. please answer in your own words.

Question