Exam 8: Extenssion: Ol Revenue Recognition Previous Standard

The two methods for recognizing revenue from long-term contracts are the percentage-of-completion method and the point-of-sale method.

Explain a bill-and-hold arrangement.

Over the life of an installment account receivable, the cost-recovery method and the installment sale method recognize the same amount of gross profit.

Tullis Construction enters into a long-term fixed price contract to build an office tower for $13,000,000. In the first year of the contract. Tullis incurs $3,000,000 of cost and the engineers determined that the remaining costs to complete are $5,000,000. Tullis billed $4,000,000 in year 1 and collected $3,200,000 by the end of the end of the year. Refer to Tullis Corporation. How much should revenue should Tullis recognize at the end of Year 1 assuming the use of the zero-gross-profit approach?

The right of return represents a separate performance obligation.

Transactions where a buyer accepts title and billings but delays receipt of the goods is a bill-and-hold arrangement.

The percentage-of-completion method conforms to the matching principle.

ABC Company is holding goods with a selling price of $250,000 which cost them $86,000. On December 3, 2017, ABC sold the goods to Timmons under a bill-and-hold arrangement. At the end of 2017, ABC still holds the goods. How much revenue should ABC recognize for 2017?

Craft Construction Craft Construction entered into a contract to construct a generator station for a utility customer. The project was started in 2016 and completed in 2017. Cost and other information is presented below. Costs incurred during the year \ 225,000 \ 550,000 Estimated costs to complete 450,000 -0- Billings during the year 200,000 700,000 Cash collections during the year 150,000 750,000 -Refer to Craft Construction. Assume Craft uses the completed-contract method for revenue recognition. Compute the amount of gross profit for 2016 and 2017.

Under the zero-gross profit approach, revenues are only reported in the last year.

Under the completed-contract method, revenues are only reported in the last year.

On November 15, 2016, LaGrow Developers sold a parcel of land for $4,000,000. They had originally paid $3,600,000 for the land. The terms of the sale called for a $2,000,000 down payment, and the balance in two equal installments payable on November 15, 2017 and November 15, 2018. Disregard interest charges. LaGrow has a December 31 year-end. Refer to LaGrow Developers. Assuming that LaGrow uses the cost-recovery method, in its December 31, 2016 balance sheet, the company would report ________.

IFRS requires disclosure or the amount of revenue earned from interest and dividends.

The method of reporting gross profit for long term contracts that does a better job of providing relevant information on the income statement is the ________.

The major difference between the percentage-of-completion method and the completed-contract method is the timing of ________.

Fare Jewelry Company is holding goods on consignment from Tomko with a selling price of $700,000. Fare is promised a commission of 25% for goods sold. By the end of 2017 Fare has sold $530,000 of goods. Refer to Fare Jewelry. How much revenue should Tomko recognize for 2017 on this transaction?

The percentage-of-completion method recognizes gross profit ________.

IFRS does not require persuasive evidence of an arrangement in order for revenue to be recognized.

According to the FASB, revenue is recognized when it is realized or realizable and has been earned.

Construction costs and profits in excess of billings are carried on the balance sheet as a(n) ________.