Answered: Briefly describe the guidelines…

Briefly describe the guidelines provided by GAAP for the recognition of revenue by a franchisor for an initialfranchise fee

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 1MC: A company should recognize revenue when a. the revenue is earned b. die contract is signed c. the...

See similar textbooks

Related questions

Q: Define in detail the basic activities performed in the revenue cycle along with its key decisions…

A: Revenue cycle Revenue cycle is a technique of shaping and maintaining the techniques used for…

Q: Which of the following situations may give rise to unearned revenue? Select one: a. Providing trade…

A: The Unearned revenue is the revenue not earned yet but has been received in cash for future service.…

Q: Compute for the sale revenue to be recognized from the transaction above.

A: A contract is made when one party who is known as seller makes an offer and other party who is known…

Q: Which of the following best describes the current revenue recognition principle? Recognize revenue…

A: Revenue means the amount earned by selling the goods or services. Revenue is recognized in books of…

Q: The seller collects sales taxes from the customer at the time of sale and reports the sales taxes as…

A: Sales tax: When the one person sold goods to another person for the business or resold purpose then…

Q: How should a non vat seller treat input vat paid on the purchases from vat supplier of inventories…

A: The major purpose of adopting VAT is to reduce the effects of multiple taxes and the cascading…

Q: The third step in the process for revenue recognitio

A: REVENUE RECOGNITION shows the transfer of promised goods or services in an amount that reflects how…

Q: Which of the following provides the best explanation for why warranty expense should be estimated…

A: Goods that are sold in a year can presented for warranty repair in upcoming years. But this warranty…

Q: Revenue is recognized based on a five-step process that is applied to a company's revenue…

A: Definition: Revenue recognition: GAAP (generally accepted accounting principle) states that under…

Q: Explain the 5 step Revenue Recognition process as found in IFRS 15-Revenue from Contracts with…

Q: The revenue recognition principle dictates that revenue should be recognized in the accounting…

A: Revenue recognition principle says the revenues should be recorded only when the goods are sold or…

Q: Which entity is most likely to be part of both the payroll cycle Pand the expenditure cycle اختواحد…

A: Cash disbursement represents the distribution of cash from one party to another. It is the cash…

Q: Define the term payroll register.

Q: s the income and expense account credited in the entry to record the distribution profits?

A: Solution: When profit is distributed to owner, income and expense account is debited as profit is…

Q: purchase discount is relevant into the followings cycles: a. payroll and personnel O b. sales and…

A: Accounting is essential to operating a company since it allows businesses to track income and…

Q: What is meant by the term unearned revenue? Where should an unearned revenue account appear in the…

A: Revenue: It refers to the amount earned by a business from selling its goods or services to the…

Q: Which of the following is an amount for products or services purchased on account? Oaccounts payable…

A: Introduction: Balance sheet: All Assets and liabilities are shown in Balance sheet. It tells the net…

Q: What are the two main controls for payroll? Provide an example of each.

A: Payroll: The total payment that a company is required to pay to its employee for the services…

Q: While reporting revenue, how a company should consider barter arrangement and discount?

A: Revenue Reporting: The process of accounting for revenue for a product you offer to a client is…

Q: Define in detail the basic activities performed in the revenue cycle along with its key decisions…

A: Revenue cycle refers to the method which compiles the sets of business activities used for defining…

Q: Which transaction cycle includes interactions between an organization and its suppliers? Select one:…

A: Transaction cycle is set of various business transactions which can be aggregated to small number of…

Q: When should a seller view a payment to its customer as a refund of part of the price paid by the…

A: Revenue recognition principle: The revenue recognition principle refers to the revenue that…

Q: For each of the following records, indicate the appropriate related file structure: master file,…

Q: describe general principles of revenue recognition and accrual accounting, specifi c revenue…

A: According to IFRS, a company should recognize revenue from the sale of goods whenever the following…

Q: Under the new revenue recognition standard, what must companies do at the end of the period related…

A: Revenue recognition principle: According to revenue recognition principle, when the goods are sold…

Q: An audit team would most likely examine the detail support for charges to which of the following…

A: Audit Procedures: A specific procedure undertaken by an auditor to procure evidence in a particular…

Q: Under the new revenue recognition standard, how is the sale of inventory recorded?

A: Revenue: It refers is the total amount of earnings generated from selling goods or rendering…

Q: Under what conditions should a company disclose the amount of sales from a major customer?

A: Sales: A sale refers to a transaction that take place between two parties where a buyer receives…

Q: Describe the cost and basic accounting activities related to payroll ?

A: Payroll accounting is just recording the payroll expenses of a business into the final ledger.

Q: Which of the following statements is not applicable to revenue recognition guidance under ASC Topic…

A: In the given case all of the following are true regarding revenue recognition principal provided in…

Q: Place the following steps for recognising revenue in order in accordance with IFRS 15 Revenue from…

A: We have the following question:

Q: A seller reports accounts receivable, “contract liabilities,” and “contract assets” on separate…

Q: Outline the accounting procedures involved in applyingthe operating method by a lessor.

Q: Understand the disclosures required for revenue recognition, accounts receivable,contract assets,…

A: Much disclosure is required for revenue recognition. For example, a seller recognises contract…

Q: A company regularly purchases materials from a manufacturer on credit. Payments for thesepurchases…

A: Current liabilities are those dues and obligations which needs to be settled by the business in…

Q: Outline the accounting procedures involved in applyingthe operating method by a lessee.

Q: Which function should distribute paychecks?a. personnelb. timekeepingc. paymasterd. payroll

Q: Describe the costs and the basic accounting activities relationg to payroll

A: Payroll:- Payrolll may be a list of workers who get paid by the corporate. Payroll also refers to…

Q: Which of the following steps in the expenditure cycle would not appear as event entities in an REA…

A: Which of the following steps in the expenditure cycle would not appear as event entities in an REA…

Q: Identify significant accounts and relevantassertions related to the revenue andcollection cycle.

A: Revenue and collection cycle: Under this procedure, the collection period from the customer is to be…

Q: Describe presentation and disclosure regarding revenue.

A: The core principle of IFRS 15 is that revenue is recognised when the goods or services are…

Q: The FASB has established a Five-Step process to recognize revenue. Which of the following is not…

A: FASB has given five step process for revenue recognition.That is accepted every where.

Q: What are the five key steps a company follows to apply the core revenue recognition principle?

A: Revenue recognition principle: Revenue recognition principle refers to the revenue that should be…

Concept explainers

Audit Procedures

Audit Procedures are methods and techniques performed by the auditor to determine the quality of financial information of clients, thereby expressing an opinion on true & fair view of financial statements and entity position. They are identified and applied at the planning stage of audit after determining audit objectives, scope, approach, and risk assessment.

Question

Briefly describe the guidelines provided by GAAP for the recognition of revenue by a franchisor for an initial
franchise fee

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Audit procedures for items of Financial Statement

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The first step in the revenue recognition process is determining if a contract is in place between the seller and the customer. A contract is an agreement between two or more parties that creates enforceable rights and obligations. The standard states that a contract may be written, oral, or implied by customary business practices. To be a contract, the accounting standard states that it must meet five criteria. Required: Discuss the criteria necessary for a contract to be considered under the revenue recognition process. How would a company account for a contract that does not meet the criteria?
What accounts are debited and credited when an employer records the electronic transfer of FICA taxes and federal income taxes that have been withheld?
A company should recognize revenue when a. the revenue is earned b. die contract is signed c. the seller satisfies the performance obligation d. the consideration is received
At what point does revenue recognition occur? A. When the purchase order is received B. When the seller receives the money for the job C. When the seller has met performance D. When the purchaser makes payment
Explain the revenue recognition process when a performance obligation is satisfied over time according to IFRS 15-Revenue from Contracts with Customers.
describe general principles of revenue recognition and accrual accounting, specifi c revenue recognition applications (including accounting for long-term contracts, installment sales, barter transactions, gross and net reporting of revenue), and implications of revenue recognition principles for fi nancial analysis
Understand the disclosures required for revenue recognition, accounts receivable,contract assets, and contract liabilities
When goods are sold on a bill-and-hold basis, what conditions must be met to recognize revenue upon receipt of the order?
What is Revenue Recognition Companies should recognize revenue in the accounting period in which a contract is finalized Companies should recognize revenue in the accounting period in which services are performed. O Companies should ecognize revenue when the customer pays its bill
Which of the following situations may give rise to unearned revenue? Select one: a. Providing trade credit to customers. b. Selling inventory. c. Providing manufacturer warranties. d. Selling magazine subscriptions.
Explain the importance of a contract in the revenue recognitionprocess.
Pick one company example in TABLE 1 and provide a conjecture about why the company recognizes revenue in that manner per ASC 606.?