True or False Under the new “Revenue Recognition” accounting principles, firms with long-term contracts will be...
True or False
Under the new “Revenue Recognition” accounting principles, firms with long-term contracts will be required to breakdown and allocate the total cost and price of the contract into various segments, and recognize revenues, costs, and profits for these segments.
Homework Answers
| Answer |
True: Combining and segmenting contracts is
permitted provided certain criteria are met, but it is not required
so long as the underlying economics of the transaction are fairly
reflected. The basic presumption is that each contract is the
profit centre for revenue recognition, cost accumulation, and
income measurement. That presumption may be overcome only if a
contract or a series of contracts meets the conditions described above for combining or segmenting contracts. There is no further guidance for separately accounting for more than one deliverable in a construction contract under the construction contract guidance. |
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True or False
Under the new “Revenue Recognition” accounting principles, firms
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Two methods used to account for revenue recognition for long term contracts are the percentage-of-completion method...
Two methods used to account for revenue recognition for long term contracts are the percentage-of-completion method and the ________. completed-contract method sales method cost recovery method installment sales method
When using the completed contract method of accounting for long-term contracts: A. Estimated losses on the...
When using the completed contract method of accounting for long-term contracts: A. Estimated losses on the overall contract are recognized before the contract is completed. B. Expenses are recorded each period, but revenue is only recognized when the contract is completed. C. Use of this method is not permitted under generally accepted accounting principles. D. Neither gains nor losses are recognized until the contract is completed.
Distinguish among the percentage-of-completion, cost recovery, and completed contract methods of accounting for long-term contracts with...
Distinguish among the percentage-of-completion, cost recovery, and completed contract methods of accounting for long-term contracts with respect to income recognition. Under what circumstances should a company use the cost recovery method or the completed contact method?
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts. The discussion...
Two accounting students were discussing the timing of revenue recognition for long-term construction contracts. The discussion focused on which method was most like the typical revenue recognition method of recognizing revenue at the point of product delivery. Bill argued that recognizing revenue upon project completion was preferable because it was analogous to recognizing revenue at the point of delivery. John disagreed and supported recognizing revenue over time, stating that it was analogous to accruing revenue as a performance obligation was...
1.Which of the following statements is true regarding the new ASC Topic 606 for revenue recognition?...
1.Which of the following statements is true regarding the new ASC Topic 606 for revenue recognition? Multiple Choice The focus is on when the firm has earned the consideration to which it is entitled. Early adoption is not allowed. The new rules are more rules-based than principle-oriented. Under IFRS, both public and non-public firms must adopt by 2018 2.Assuming the requirements for recognizing revenue over time are met, the measure of completion is computed by dividing Multiple Choice profits earned...
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one...
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one year to complete), the two methods commonly followed are percentage-of-completion and completed- contract Instructions (a) Discuss how earnings on long-term construction contracts are recognized and computed under these two methods. (b) Under what circumstances should one method be used over the other? (c) How are job costs and interim billings reflected on the balance sheet under the percentage-of-completion method and the completed-contract method?
Discuss in detail basic revenue recognition and measurement issues. Explain how transaction price is determined in...
Discuss in detail basic revenue recognition and measurement issues. Explain how transaction price is determined in recognizing revenue. Discuss allocation of the transaction price to performance obligations when recognizing revenue. What are the key concerns in accounting for long-term contracts. Compare and contrast the percentage-of-completion and completed-contract methods of revenue recognition. Discuss accounting for special issues in revenue recognition. What are the required disclosures related to revenue recognition. (No plagiarism thank you)
Brief Exercise 5-33 Long-term contract; revenue recognition upon completion [LO5-9] A construction company entered into a...
Brief Exercise 5-33 Long-term contract; revenue recognition upon completion [LO5-9] A construction company entered into a fixed-price contract to build an o million. Construction costs incurred during the first year were $18 million and estimated costs to complete at the end of the year were $27 million. The building was completed during the second year. Construction costs incurred during the second year were $28 million. ng How much revenue and gross profit or loss will the company recognize in the...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $30,000000 The road was completed in 2020 Information related to the contract is as folows Billings during the year Cash cellections during the year 1,800,0003,690,84,600,0 SeferencesWestgate Construction uses the completed contract method of accounting for long-term construction contrects Required: 1. Calculate the amount of revenue and gross profit (oss) to be...
Ex. 18-123-Long-term construction contracts (essay). In accounting for long-term construction contracts (those taking longer than one year to complete), the two methods commonly followed are percentage-of-completion and completed- contract Instructions (a) Discuss how earnings on long-term construction contracts are recognized and computed under these two methods. (b) Under what circumstances should one method be used over the other? (c) How are job costs and interim billings reflected on the balance sheet under the percentage-of-completion method and the completed-contract method?
Brief Exercise 5-33 Long-term contract; revenue recognition upon completion [LO5-9] A construction company entered into a fixed-price contract to build an o million. Construction costs incurred during the first year were $18 million and estimated costs to complete at the end of the year were $27 million. The building was completed during the second year. Construction costs incurred during the second year were $28 million. ng How much revenue and gross profit or loss will the company recognize in the...
6 Problem 5-11 Long-term contract; revenue recognition upon completion [LO5-9) In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $30,000000 The road was completed in 2020 Information related to the contract is as folows Billings during the year Cash cellections during the year 1,800,0003,690,84,600,0 SeferencesWestgate Construction uses the completed contract method of accounting for long-term construction contrects Required: 1. Calculate the amount of revenue and gross profit (oss) to be...
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