There are five revenue recognition? criteria. 1.Identify the contract with the customer. 2.Identify the performance obligations....

There are five revenue recognition? criteria.

1.Identify the contract with the customer.

2.Identify the performance obligations.

3.Determine the transaction price.

4.Allocate the transaction price to performance obligations.

5.Recognize revenue in accordance with performance.

There are some situations.a.
a.An apartment owner receives a deposit of? $1200 equal to one? month's rent.
b.An insurance company receives annual premiums for fire insurance on June 25 for coverage beginning July 1.
c.A city transit authority issues? 200,000 monthly passes at? $80 each for sale at various retailers. Retailers act as consignees for these passes.
d.A city transit authority sells? 50,000 monthly passes at? $80 each to transit riders at its own retail? offices/stores.e.
e.A provincial lottery corporation delivers 10 million? scratch-and-win cards to retailers. The cards retail for? $2 and generate a commission of? $0.20 per card for the retailer. The retailer can return unsold cards to the lottery corporation.

Just identify which revenue recognition? criterion/criteria is/are NOT met at the point of? sale, preventing the recognition of revenue at that time

Solutions

Expert Solution

1. It is not probable that the economic benefits (the value of the deposit) will flow to the entity. performance obligations not met.

2. Performance Obligation is Stage of Completion. So the revenue will be recognized over the period of time. Allocate the transaction price to performance obligations

3. The transit authority has not transferred to the buyer the risks and rewards of ownership. Performance Obligation not met.

4. Revenue should be recognized according to the stage of completion. The period for which the passes are valid has not elapsed. Allocate the transaction price to performance obligations not available.

5. The lottery corporation has not transferred to the buyer the risks and rewards of ownership. Performance Obligation not met.

Dear Student,

Best effort has been made to give quality and correct answer. But if you find any issues please comment your concern. I will definitely resolve your query.

Also please give your positive rating.

ekkarill92 answered 1 year ago

Next > < Previous

Related Solutions

Provide an example of transaction that follows five-step revenue recognition principle. Please identify each revenue recognition...

Provide an example of transaction that follows five-step revenue recognition principle. Please identify each revenue recognition steps.

Chapter 11 1) A contract is defined as a promise creating legal obligations of performance. a)...

Chapter 11 1) A contract is defined as a promise creating legal obligations of performance. a) The four elements of a valid contract are best remembered by using the pneumonic CLAC. What does CLAC stand for? b) How many parties are required for a valid contract? c) How many promises are required for a valid contract? d) At what point is a unilateral contract formed? A bilateral contract? e) Compare an express contract with an implied contract f) What is...

A company is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for...

A company is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for manufacturing 20 race cars. The customer needs the cars by May 1, 2021. The customer provides a bonus payment of $320,000 if all cars are delivered by the May 1 deadline. The bonus is reduced by a fourth of the total available bonus amount (i.e., reduced by $320,000 divided by 4) each week that the cars are delivered after the deadline until no bonus...

Felix Corp. is evaluating a contract to determine proper revenue recognition. The contract is for construction...

Felix Corp. is evaluating a contract to determine proper revenue recognition. The contract is for construction of 10 yachts for a total price of $10,000,000. The customer needs the boats in its showrooms by March 1, 2018, for the yacht purchase season; the customer will provide a bonus payment of $100,000 if all yachts are delivered by the March 1 deadline. The bonus is reduced by $25,000 each week that the boats are delivered after the deadline until no bonus...

"Revenue Recognition" The revised revenue recognition accounting standard employs a five-step process to achieve the core...

"Revenue Recognition" The revised revenue recognition accounting standard employs a five-step process to achieve the core principle to recognize income upon the transfer of promised goods or services. Use the Internet or Strayer Library to research a company that bundles a product and a service. Examine income recognition of the bundled product and service for the company by addressing each step in the five-step process for revenue recognition. Give your opinion on the most critical step for accurately reporting revenue...

Address the following items in a memo: 1. Describe the five steps of the revenue recognition...

Address the following items in a memo: 1. Describe the five steps of the revenue recognition model. Specifically provide an explanation and example as to what signifies a performance obligation. 2. Provide an overview of Krispy Kreme's business model and summarize the unethical accounting and business practices at the company as detailed. Specifically, report on the company's channel stuffing business procedures. 3. Summarize the facts presented in Krispy Kreme's stock value. 4. Explain the relationship between the company's unethical accounting...

Which of the following would be an example of multiple performance obligations? Customer accepts delivery for...

Which of the following would be an example of multiple performance obligations? Customer accepts delivery for a new outdoor spa tub Contractor is hired to fix an overhead door and replaces several parts including springs and tracks. Customer purchases a new gas range and two-year extended warranty . Customer purchases a family pack of tickets to the Wolves football team that includes multiple tickets for the same game.

The residual approach to allocate transaction prices to multiple performance obligations in a contract is appropriate...

The residual approach to allocate transaction prices to multiple performance obligations in a contract is appropriate when: Multiple Choice None of the goods and services included in the contract are not sold on a stand-alone basis. None of the answer choices are correct. The stand-alone price of all of the goods or services is known. The stand-along price of one or more of the goods or services is highly variable or uncertain. 3. A patient of Dr. Jones presents his...

The agreed contract price is $96,000. How should this price be allocated to performance obligations?

IFRS 16The agreed contract price is $96,000. How should this price be allocated to performance obligations? Llama limited sells and equipment on January 01, 2019 which she bought on January 01,2016 for $6,000, and has been depreciating the equipment each year at 25% per annum on a straight line basis.It trades this equipment in for new one costing $10,000 pays the supplier $9,200 in cash. What is the gain or loss on the disposal of the old equipment?Unicorn Express Co....

Explain one or two differences between general criteria for revenue recognition and same in the AASB...

Explain one or two differences between general criteria for revenue recognition and same in the AASB 118 revenue recognition principles? please explain properly in point formats.

Subjects