If a company sells a product, and gives the buyer the right to return the product within a specified period, revenue from the sales transaction should be recognized at the time of sale if: Question 21 options: there is a transfer of the risks and rewards of ownership. the market for returnable goods is unknown. the amount of future returns can be reasonably estimated. the amount of goods returned is likely to be high.

If a company sells a product, and gives the buyer the right to return the product within a specified period, revenue from the sales transaction should be recognized at the time of sale if: Question 21 options: there is a transfer of the risks and rewards of ownership. the market for returnable goods is unknown. the amount of future returns can be reasonably estimated. the amount of goods returned is likely to be high.

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter4: Balance Sheet: Presenting And Analyzing Resources And Financing

Section: Chapter Questions

Problem 9Q

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Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is true regarding contracts with customer options? In some cases where customers have an option to acquire additional goods or services, an evaluation is required to determine if the option creates an additional performance obligation. An additional performance obligation is created if the customer could obtain the same rights to additional goods or services without entering the contract. An additional performance obligation is created if the option provides the customer a right to purchase the goods or services at the stand-alone selling price for those goods or services. It is generally not considered a performance obligation when a retailer grants a "customer appreciation dividend" to a customer.
24) In which method of purchasing, company purchases material at lower price and sell them at higher price in future. a. Contract purchasing b. Co-operative purchasing c. Speculative purchasing d. Specific future period purchasing
Purchase commitmentsA. Are obligations of the company to acquire certain goods at a fixed price and fixed quantity sometime in the futureB. require disclosures when considered common and significantC. Giving rise to a purchase price falling below the agreed price is accounted for as debit to loss on purchase commitments and credited to an estimated liabilityD. All of the aboveE. None of the aboveOwnership of inventories is normally transferred to the buyerA. when legal title to inventories is transferredB. when the purchase price if fully paidC. upon shipment of the goodsD. upon filling up the sales orderWhen accounting for inventoriesA. the form of sales contract is more important than its substanceB. the agreement between seller and buyer shall be considered in determining the timing of transfer of ownership over the goodsC. sales contract is ignored since ownership over inventories are transferred only upon receipt of delivery by the buyerD. a journal entry is made only upon receipt…
Which one among the following conditions is NOT a condition of Murabaha: - Payment may be made by buyer during construction in installments. lump sum at delivery. or deferred either with a lump sum payment or in installments - The mark-up or profit will be stated and agreed by buyer and cannot be changed later - All the conditions are conditions of Murabaha. - Cost of goods or services including any direct or indirect costs (packaging. transportation. delivery. installation, are revealed to buyer
Indicate whether each of the following statements is true or false. Farhgate Inc. should recognize revenue when the performance obligation has been satisfied and when cash is received. Answer If Massy sells its product but gives the buyer the right to return it, Massy should not recognize revenue until the sale is collected. Answer If it is difficult to determine the outcome of the contract (estimating costs and determining project revenue), IFRS requires the application of the zero-profit method. Answer
2. When the franchisor supplies equipments and inventories without a reasonable profit, part of the initial franchise fee, sufficient to cover the estimated costs in excess of that price is * A.not recognized. B.deferred and recognized over the period the goods are likely to be sold to the franchisee C.deferred and recognized when finally sold to the franchisee D. recognized immediately
Pls answer this question with solutions. A manufacturer gives warranties at the time of sale to purchasers of its product. Under the terms of the contract of sale, the manufacturer undertakes to make good, by repair or replacement, manufacturing defects that become apparent within one year from the date of sale. On the basis of experience, it is probable (i.e., more likely than not) that there will be some claims under the warranties. Sales of ₱40 million were made evenly throughout 20X1. At December 31, 20x1 the expenditures for warranty repairs and replacements for the product sold in 20x1 are expected to be made 50% in 20x1 and 50% in 20x2. Assume for simplicity that all the 20x2 outflows of economic benefits related to the warranty repairs and replacements take place on June 30, 20x2. Experience indicates that 95% of products sold require no warranty repairs; 3% of products sold require minor repairs costing 10% of the sale price; and 2% of products sold require major…
Required A 1. Record the sales agreement. 10.01.2020 2.Record entry for forward contract entered into by Mertag Company. 10.01.2020 3. Record the forward contract and recognize the change in fair value. 12.31.2020 4. Record the firm commitment and recognize the change in fair value. 12.31.2020 5. Record the entry to adjust the fair value of the forward contract. 01.31.2021 6. Record the entry to adjust the fair value of the firm commitment. 01.31.2021 7. Record the sale and receipt of PLN. 01.31.2021 8. Record settlement of forward contract. 01.31.2021 9.Record entry to close the firm commitment. 01.31.2021 Required B Determine the net benefit, if any, realized by Mertag from entering into the forward contract. (Do not round intermediate calculations. Negative amount should be entered with a minus sign.) Net benefit:
Requirements: a. Assume both Sawyer and Brown are new machine dealers and that the machines are still new. Also, assume that the exchange lacks commercial substance. At what amount will, Machine A be recorded on Brown’s books? b. Given the assumption in letter a, at what amount will Machine B be recorded on Sawyer’s books? c. Assume that instead of dealers, both Sawyer and Brown are machine manufacturers and use the machines in production. Assume the exchange lacks commercial substance. At what amount will Brown record machine A? d. Given the assumptions in C above, at what amount will Sawyer record Machine B? e. Given the assumption in no.3 above except in the fair values of Machines A and B are $504,000 and $450,000, respectively, at what amount will Brown record Machine A? f. Return to the original problem. Assume that Sawyer is a dealer selling new machines and that Brown is a manufacturer. Assume that the exchange has commercial substance. For this transaction, at what amount will…
Revenue should be recognized over time when a performance obligation is satisfied over time. That occursif (1) the customer consumes the benefit of the seller’s work as it is performed, (2) the customer controlsthe asset as the seller creates it, or (3) the asset has no alternative use to the seller and the seller can be paidfor its progress even if the customer cancels the contract
A company should immediately recognize: A) any gain when it constructs a piece of equipment at a cost savings. B) any gain when it makes a bargain purchase. C) any gain when a company receives no cash for an asset received in an exchange. D) any loss when it ignorantly pays too much for an asset originally.
AASB 13 defines exit price as: Select one: A. The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. B. The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction. C. The price that would be received to sell an asset or paid to transfer a liability. D. A transaction that assumes exposure to the market for a period before the measurement date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities; it is not a forced transaction (e.g., a forced liquidation or distress sale).

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bartleby, a Learneo, Inc. business

	no journal entry is recorded.
	cash is recorded.
	a contract liability is recorded.
	a contract asset is recorded.

	there is a transfer of the risks and rewards of ownership.
	the market for returnable goods is unknown.
	the amount of future returns can be reasonably estimated.
	the amount of goods returned is likely to be high.