Exam 5: Income Concepts, Revenue Recognition, and Other Methods of Reporting

When measuring the transaction price under the provisions of FASB ASC 606, how does a company account for a. The existence of a significant financing component (i.e., time value of money), and b. Noncash considerations.

The term revenue recognition originally referred to

In the traditional transactions approach to income determination, income was measured by subtracting the expenses resulting from specific transactions during the period from revenues of the period also resulting from transactions. Under a strict transactions approach to income measurement, which of the following would not be considered a transaction?

Under FASB ASC 606, the third step in the revenue recognition process is to

Discuss the differences between the economic and accounting concepts of income.

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 is paid if the boats are delivered after March 22, 2018. Felix frequently includes such bonus terms in it contracts and thus has good historical data for estimating the probabilities of completion at different dates. It estimates an equal probability (25%) for each full delivery outcome. How should Felix determine the transaction price under FASB ASC 606 for this contract?

Discuss the difference between financial capital maintenance and physical capital maintenance.

Which of the following accounting theorists called of conservatism the most influential principle of valuation in accounting?

Explain the transaction approach to measuring income. Why is the transaction approach to income measurement preferable to other ways of measuring income?

The principal disadvantage of using the percentage of completion method of recognizing revenue from long-term contracts is that it

Deliberately recording errors or ignoring mistakes in the financial statements under the assumption that their impact is not significant, is the definition of which of the following earnings management techniques?

Discuss the matching concept.

FASB ASC 606 outlines the accounting for contract modifications. Discuss accounting for contract modifications.

Discuss the four types of income defined by Edwards and Bell.

Under FASB ASC 606, the fourth step in the revenue recognition process is to

The one-time overstatement of restructuring charges to reduce assets, which reduces future expenses, is the definition of which of the following earnings management techniques?

According to FASB ASC 606, the transaction price

Conventionally accountants measure income

The definition of the economic concept of income is usually attributed to which of the following economists?

Determining periodic earnings and financial position depends on measuring economic resources and obligations and changes in them as these changes occur. This explanation pertains to