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Exam 5: Income Measurement and Profitability Analysis

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Question 81

Multiple Choice

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The amount of revenue that GAAP, regarding software revenue recognition, would require Sullivan to attribute to the software program (as opposed to the technical support) is (rounded) :

A) $450.
B) $475.
C) $432.
D) $400.

E) All of the above
F) None of the above

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Question 82

Multiple Choice

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Using the percentage-of-completion method, Indiana:

A) Recognized no gross profit or loss on the project in 2013.
B) Recognized $6 million loss on the project in 2013.
C) Recognized $9 gross profit on the project in 2013.
D) Recognized $36 million loss on the project in 2013.

E) All of the above
F) B) and C)

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Question 83

Multiple Choice

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Merchandise sold FOB shipping point indicates that:

Beck Construction Company began work on a new building project on January 1, 2012. The project is to be completed by December 31, 2014, for a fixed price of $108 million. The following are the actual costs incurred and estimates of remaining costs to complete the project that were made by Beck's accounting staff: Required: What amount of gross profit (or loss) would Beck record on this project in each year under the completed contract method? Place answers in the spaces provided below and show supporting computations.

Briefly indicate at least two indicators that can be used to distinguish whether a seller is a principal or an agent according to GAAP.

Assuming BCC used the completed contract method to recognize revenue, what would gross profit have been in 2012 and 2013 (rounded to the nearest thousand) ?

In 2013, Rigsby would recognize realized gross profit of:

Besides size differences, what other differences between McDonald's and its industry peer group could limit your ability to make meaningful comparisons about the performance of McDonald's from the data above?

Assume that Beavis uses the percentage-of-completion method for revenue recognition. Required: Prepare all journal entries to record costs, billings, collections, and profit recognition.

Explain the differences between how a principal and agent would show a sale of a product that has gross revenues of $1,000, cost of goods sold of $750, and a commission paid by the principle of 10% of gross sales on their respective income statements.

Assume that Beavis uses the completed contract method for revenue recognition. Required: Compute the amount of gross profit recognized during 2012 and 2013.

The cost recovery method of accounting for long-term contracts under IFRS is sometimes referred to as the:

Under IFRS, revenue for a product sale should occur when:

For 2012, what is the journal entry to record revenue?

Hulkster's 2013 inventory turnover is (rounded) :

At December 31, 2014, Rigsby would report in its balance sheet:

Which of the following was not a criterion for revenue recognition in SAB 101?

In 2015, Lake would record a loss on repossession of:

Slick's Used Cars sells pre-owned cars on the installment basis and carries its own notes because its customers typically cannot qualify for a bank loan. Default rates tend to be high or unpredictable. However, in the event of nonpayment, Slick's can usually repossess the cars without loss. The revenue method Slick would use is the:

Assume that Beavis uses the completed contract method for revenue recognition. Required: Prepare all journal entries to record costs, billings, collections, and profit recognition.