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Intermediate Accounting

Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Chapter 18

Revenue Recognition - all with Video Answers

Educators

Chapter Questions

00:37

Problem 1

Explain the current environment regarding revenue recognition

Luke P
Luke P
Numerade Educator
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Problem 1

Explain the difference between pretax financial income and taxable income.

James Kiss
James Kiss
Numerade Educator
04:42

Problem 2

When is revenue conventionally recognized? What conditions should exist for the recognition at date of sale of all or part of the revenue of any sale transaction?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
04:42

Problem 2

When is revenue conventionally recognized? What conditions should exist for the recognition at date of sale of all or part of the revenue of any sale transaction?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
01:37

Problem 3

When is revenue recognized in the following situations:
(a) Revenue from selling products? (b) Revenue from services rendered? (c) Revenue from permitting others to use enterprise assets? (d) Revenue from disposing of assets other than products?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:37

Problem 3

When is revenue recognized in the following situations:
(a) Revenue from selling products? (b) Revenue from services rendered? (c) Revenue from permitting others to use enterprise assets? (d) Revenue from disposing of assets other than products?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:28

Problem 4

Identify several types of sales transactions and indicate the types of business for which that type of transaction is common.

Jennifer Stoner
Jennifer Stoner
Numerade Educator
01:28

Problem 4

Identify several types of sales transactions and indicate the types of business for which that type of transaction is common

Jennifer Stoner
Jennifer Stoner
Numerade Educator
05:38

Problem 5

What are the three alternative accounting methods available to a seller that is exposed to continued risks of ownership through return of the product?

Mihir Nayar
Mihir Nayar
Numerade Educator
05:38

Problem 5

What are the three alternative accounting methods available to a seller that is exposed to continued risks of ownership through return of the product?

Mihir Nayar
Mihir Nayar
Numerade Educator
05:38

Problem 6

Under what conditions may a seller who is exposed to continued risks of a high rate of return of the product sold recognize sales transactions as current revenue?

Mihir Nayar
Mihir Nayar
Numerade Educator
05:38

Problem 6

Under what conditions may a seller who is exposed to continued risks of a high rate of return of the product sold recognize sales transactions as current revenue?

Mihir Nayar
Mihir Nayar
Numerade Educator
02:18

Problem 7

What are the two basic methods of accounting for longterm construction contracts? Indicate the circumstances that determine when one or the other of these methods should be used.

Ameer Said
Ameer Said
Numerade Educator
02:18

Problem 7

What are the two basic methods of accounting for longterm construction contracts? Indicate the circumstances that determine when one or the other of these methods
should be used.

Ameer Said
Ameer Said
Numerade Educator
03:51

Problem 8

Hawkins Construction Co. has a 60 million dollar contract to
construct a highway overpass and cloverleaf. The total estimated cost for the project is 50 million dollar. costs incurred in the first year of the project are 8 dollar million. Hawkins Construction Co. appropriately uses the percentage-ofcompletion method. How much revenue and gross profit should Hawkins recognize in the first year of the project?

Carrie Hicks
Carrie Hicks
Numerade Educator
01:44

Problem 9

For what reasons should the percentage-of-completion method be used over the completed-contract method whenever possible?

Ameer Said
Ameer Said
Numerade Educator
01:27

Problem 10

What methods are used in practice to determine the extent of progress toward completion? Identify some "input measures" and some "output measures" that might be used to determine the extent of progress.

Suzanne W.
Suzanne W.
Numerade Educator
01:28

Problem 11

What are the two types of losses that can become evident in accounting for long-term contracts? What is the nature of each type of loss? How is each type accounted for?

Ameer Said
Ameer Said
Numerade Educator
01:45

Problem 12

Under the percentage-of-completion method, how are the Construction in Process and the Billings on Construction in Process accounts reported in the balance sheet?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
02:29

Problem 13

Explain the differences between the installment-sales method and the cost-recovery method.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
02:51

Problem 14

Identify and briefly describe the two methods generally employed to account for the cash received in situations where the collection of the sales price is not reasonably assured.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
00:52

Problem 15

What is the deposit method and when might it be applied?

James Kiss
James Kiss
Numerade Educator
03:12

Problem 16

What is the nature of an installment sale? How do
installment sales differ from ordinary credit sales?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
03:12

Problem 17

Describe the installment-sales method of accounting.

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
01:39

Problem 18

How are operating expenses (not included in cost of goods sold) handled under the installment-sales method of ac-
counting? What is the justification for such treatment?

Ameer Said
Ameer Said
Numerade Educator
02:40

Problem 19

Mojave sold her condominium for 500,000 dollar on September 14, 2010 ; she had paid 330,000 dollar for it in 2002 . Mojave collected the selling price as follows: 2010, 80,000 dollar ; 2011 320,000 dollar ;and 2012, 100,000 dollar. Mojave appropriately uses the installment-sales method. Prepare a schedule to determine the gross profit for 2010,2011 , and 2012 from the installment sale

Priyanka Sadarangani
Priyanka Sadarangani
Numerade Educator
03:12

Problem 20

When interest is involved in installment-sales transactions, how should it be treated for accounting purposes?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
04:42

Problem 21

At what time is it proper to recognize income in the following cases: (a) Installment sales with no reasonable basis for estimating the degree of collectibility? (b) Sales for future delivery? (c) Merchandise shipped on consignment? (d) Profit on incomplete construction contracts?
(e) Subscriptions to publications?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
04:42

Problem 22

At what time is it proper to recognize income in the following cases: (a) Installment sales with no reasonable basis for estimating the degree of collectibility? (b) Sales for future delivery? (c) Merchandise shipped on consignment? (d) Profit on incomplete construction contracts?
(e) Subscriptions to publications?

Puneet Prajapati
Puneet Prajapati
Numerade Educator
02:29

Problem 23

When is revenue recognized under the cost-recovery method?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
02:29

Problem 24

When is revenue recognized under the deposit method? How does the deposit method differ from the installmentsales and cost-recovery methods?

Oluwadamilola Ameobi
Oluwadamilola Ameobi
Numerade Educator
00:48

Problem 25

What is a major difference between iGAAP and U.S. GAAP as regards revenue recognition practices?

Daniel Cisneros
Daniel Cisneros
Numerade Educator
02:35

Problem 26

iGAAP prohibits the use of the completed-contract method in accounting for long-term contracts. If revenues and costs are difficult to estimate, how must companies account for long-term contracts?

Ameer Said
Ameer Said
Numerade Educator
06:45

Problem 27

Livesey Company has signed a long-term contract to build a new basketball arena. The total revenue related to the contract is $\$ 120$ million. Estimated costs for building the arena are $\$ 40$ million in the first year and $\$ 30$ million in both the second and third year. The costs cannot be reliably estimated. How much revenue should Livesey Company report in the first year under iGAAP?

Daniel Nolan
Daniel Nolan
Numerade Educator
00:30

Problem 28

Why in franchise arrangements may it not be proper to recognize the entire franchise fee as revenue at the date of sale?

Nick Johnson
Nick Johnson
Numerade Educator
01:00

Problem 29

How does the concept of "substantial performance" apply to accounting for franchise sales?

Srikar Katta
Srikar Katta
Numerade Educator
01:28

Problem 30

How should a franchisor account for continuing franchise fees and routine sales of equipment and supplies to franchisees?

Jennifer Stoner
Jennifer Stoner
Numerade Educator
04:33

Problem 31

What changes are made in the franchisor's recording of the initial franchise fee when the franchise agreement:
(a) Contains an option allowing the franchisor to purchase the franchised outlet, and it is likely that the option will be exercised?
(b) Allows the franchisee to purchase equipment and supplies from the franchisor at bargain prices?

Jiapeng Guo
Jiapeng Guo
Numerade Educator
01:28

Problem 32

What is the nature of a sale on consignment? When is revenue recognized from a consignment sale?

Jennifer Stoner
Jennifer Stoner
Numerade Educator