Question
In: Accounting
Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period...
Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period for $10,000 per month on January 1. At the end of the contract, Jonas will either give the customer a $24,000 refund or be entitled to an additional $24,000, depending on the level of cost savings. The company believes there is an 80% chance that it will be entitled to an additional $24,000 and a 20% chance it will give a refund of $24,000. In addition, Jonas believes it is probable that a significant reversal of any previously recognized revenue will not occur. The contract performance is determined to be satisfied over time.
Part A: Prepare the journal entry on January 31 to record the first month of the contract using the most likely amount approach.
Part B: Determine the monthly transaction price that Jonas should use for recording the contract using the most likely amount approach.
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Jonas Consulting enters into a contract to provide cost management consulting services over a one-year period...
Jonas Consulting enters into a contract to provide cost management
consulting services over a one-year period for $10,000 per month on
January 1. At the end of the contract, Jonas will either give the
customer a $24,000 refund or be entitled to an additional $24,000,
depending on the level of cost savings. The company believes there
is an 80% chance that it will be entitled to an additional $24,000
and a 20% chance it will give a refund of $24,000....
1. On November 1, 2018, Taylor signed a one-year contract to provide handyman services on an...
1. On November 1, 2018, Taylor signed a one-year contract to
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$5,400 for the one-year period. Taylor is confident that King will
pay that amount, but payment is not scheduled to occur until 2019.
Taylor should recognize revenue in 2018 in the amount of
Multiple Choice
a. $900
b. $2,700
c. $0
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2.
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An asset with the first cost of $100,000 is depreciated over a 5-year period. It is...
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Mercure Corporation enters into a contract with Pluton Ltd. to provide a system that manages Pluton’s...
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What are the salient characteristics of strategic cost management and contract management?
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