Machinery Corp transfers the machine, and collects the total contract price on February 1, 2020 The maintenance services start on that date. Required Analyze the five steps of model of revenue recognition
Q: Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium…
A: This question deals with the concept of percentage of completion method. In this method, revenue get…
Q: During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019,…
A: Gross profit realized for 2019 is calculated in the following table: Contract price 1,000,000…
Q: Computing Income Statement Effect of Revenue Recognition on Long-Term Construction Contract On…
A: Contract means where two parties agree to do something for another party in discharge of the…
Q: In 2021, Crane Corporation began construction work under a three-year contract. The contract price…
A: Solution: Cash collected in 2021 on this contract = Contract billings - Accounts receivables
Q: Koolman Construction Company began work on a contract in 2019. The contract price is $3,000,000, and…
A: PLEASE GIVE A LIKE, your response matters 1 Year 2019 2020 Cost incurred during the…
Q: Ayala Homes is a construction company who uses the percentage of completion method in accounting for…
A: Percentage of completion method Under the percentage of completion method the total revenues and…
Q: amount of revenue to be recognized by the seller
A: Under accrual basis of accounting, revenue should be recognized upon earning. The revenue is said to…
Q: Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium…
A: Total cost in 2018 = Cost incurred to date + Estimated cost to complete = 10,200,000 + 10,200,000 =…
Q: Pharoah Construction entered into a contract to construct a bridge for a contract price of $2.95…
A: Compute revenue recognized for each year using percentage of completion method as shown below:
Q: On November 1, 2019, Gerakos Corporation sold software and a six-month technical support contract to…
A: Calculate the sales price of software:
Q: Measure the contract revenue and the contract cost in the Statement of Profit or Loss for the year…
A:
Q: In the year 2020, Olive Construction Corporation began its work on a contract for $3,700,000. Other…
A: Revenues and profits are reported on the basis of works completed as per percentage of Completion…
Q: Black Builders Co. is a construction firm that uses the percentage of completion method of…
A: solution given 2019 2020 Estimated cost at completion 6525000 6960000…
Q: ABC Company sells equipment service contracts that cover 2-year period. The sales price of each…
A: Unearned revenue is the amount of cash collected for which services are yet to be performed. It is…
Q: Ayala homes is a construction company who uses the percentage of completion method in accounting for…
A: The question is based on the concept of Accounting Standard on Construction Contracts.
Q: For each of the above transactions, prepare the journal entry to record the initial transaction.…
A: Journal: Journal is prepared for recording all the business transaction, these transaction are…
Q: a) Using the above data, compute the gross profit to be recognized for each of the three years,…
A:
Q: January 1, 2021, ABC enters into a contract to construct a building for a customer. ABC identifies…
A: The revenue and gross profit for contract can be recognized on the basis of percentage of the work…
Q: Calculate the amount of revenue to be recognized in 2020 and 2021. Calculate the construction costs…
A: Step 1 Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for…
Q: Greene Company sells office equipment service contracts agreeing to service equipment for a two-year…
A: Unearned service contract revenue on December 31 = Unearned contract Revenue at January 1 + Cash…
Q: On January 1, 2020, an entity entered into a long term construction to be completed on June 30, 2020…
A: Solution: CONTRACT PRICE : CONTRACT PRICE TILL ON JUNE 2020 2,400,000 ADD:INCREASE IN CONTRACT…
Q: Ayala Homes is a construction company who uses the percentage of completion method in accounting for…
A: A company has to recognize revenue and expenses in the year they are earned and incurred,…
Q: The loss that Creative Construction Company should have recognized in 2019 is
A: As the question specifies it uses percentage of completion method of recognizing revenue. i.e the…
Q: A Company has used the cost-to-cost-completion (over time) method of recognizing revenue. The…
A: Gross profit is calculated by deducting the cost of goods sold from the sales revenue of the…
Q: Accounting for Special Transactions On January 1, 2019, Castrano enters into a non-cancellable…
A: As per IFRS 115 Revenue Recognition Revenue is to be recognised if all recognition criteria…
Q: L&P was contracted to construct a building for Rosco at the beginning of 2020. L&P uses the…
A: The percentage of completion method recognizes the income associated to this year for a particular…
Q: Show the complete solution On January 1, 2020, an entity entered into a long term construction to…
A: The contract refers to a legal commitment made between two or more people that defines the rules and…
Q: Klope sells major household appliance service contracts for cash. The service contracts are for…
A: The question is based on the concept of Financial Accounting.
Q: Receipts from contracts are credited to unearned service contract revenue.
A: Fajardo Company First Year Contract : 200,000 ( 500,000*40% ) Second Year…
Q: Arrow Co. entered Into a contract with a customer for $500,000. The contract is for the dellvery of…
A: The contract of 500000 has two separate performance obligations. 1. To sell the equipment having a…
Q: Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium…
A: Percentage of Completion Method: Revenue from performance obligations is recognized over a period…
Q: A On January 1. 2020. Machinery Corp. enters into a contract with a customer for the sale of a…
A: Revenue refers to the amount which is earned by the seller or provider sells goods or provides the…
Q: Crane Construction Co. uses the percentage-of-completion method. In 2021, Crane began work on a…
A: Given that, the cost incurred during the year- 2021 - $8350000 2022 - $6150000 Estimated cost to…
Q: . Give a reason that might explain Murphy's desire to recognize contract revenue earlier rather…
A: 1.
Q: L&P was contracted to construct a building for Rosco at the beginning of 2020. L&P uses the…
A:
Q: The following transaction occurred during Dec 31, 2021, for the Microchip Company. On August 1,…
A: It is assumed that the requirement for this question is the preparation of the journal entries.
Q: Aurpas Homes entered into a construction agreement in 2018 for the construction of condominium…
A: Cost accounting is useful since it can show where a company spends money, how much it generates, and…
Q: Blossom Construction Company uses the percentage-of-completion method of accounting. In 2021,…
A: Gross Profit = Revenue - Cost incurred Cost incurred is given = $22000000 Now only Revenue needs…
Q: Kingbird Construction Company began work on a $418,500 construction contract in 2020. During 2020,…
A: Cost till date (a) $ 2,85,500 Further expense (b) $ 1,55,765 Total expense ( a+ b ) $…
Q: Guillen, Inc. began work on a $7,000,000 contract in 2020 to construct an office building. Guillen…
A:
Q: On December 31, 2019, Entity A enters into a contract with Customer B to transfer a license for a…
A: A franchise agreement seems to be a legal contract that establishes a franchise connection between a…
Q: Xurpas Homes entered into a construction agreement in 2018 for the construction of condominium…
A: Total cost in 2018 = Costs incurred to date + Estimated Costs to Complete = 10,200,000 + 10,200,000…
Q: he second contract year. Receipts from service contracts for the 2 years ended December 31, 2021,…
A: Receipts from contracts are credited to unearned service contract revenue . Unearned service revenue…
Q: On January 1, 2021, Crucell N.V. sold an aeroengine along with a 4 year maintenance agreement to…
A: The contracts are negotiated as a single bundle or package with a single business objective
Q: On May 1, 2021,Varga Tech Services signed a $6,000 consulting contract with Shaffer Holdings. The…
A: For recognizing the revenues, revenues must have accrued to the business. In the given situation,…
Q: Allee Corp. is evaluating a revenue arrangement todetermine proper revenue recognition. The contract…
A: Revenue recognition principle: Revenue recognition principle states that the revenue should be…
Q: On July 1, 20x1, ABC Construction Co. enters into contract with a customers for the construction of…
A: Contract Price= P60,00,000 Estimated Total Cost= P40,00,000 Actual cost Incurred=P10,20,000
Q: Marigold Construction Company uses the percentage-of-completion method of accounting. In 2020,…
A: Percentage of completion method: While accounting for construction contracts, revenue is…
Q: Coronado Industries sells major household appliance service contracts for cash. The service…
A: Unearned service revenue: Small businesses receive unearned revenue when a client pays for goods or…
Q: ABC Inc. began operations on July 1,2019. The company recognizes income from long term construction…
A: Solution Concept When the income recognized in financial statement is greater than the income as per…
Machinery Corp transfers the machine, and collects the total contract price on February 1, 2020 The maintenance services start on that date.
Required
Analyze the five steps of model of revenue recognition
Step by step
Solved in 3 steps
- Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.Service Revenue Softball Magazine Company received advance payments of $75,000 from customers during 2019. At December 31, 2019, $20,000 of the advance payments still had not been earned. Required: After the adjustments are recorded and posted at December 31, 2019, calculate what the balances will be in the Unearned Magazine Revenue and Magazine Revenue accounts. Use the following information for Cornerstone Exercises 5-23 and 5-24: Bolton sold a customer service contract with a price of S37 000 to Sammys Wholesale Company. Bolton offered terms of 1/10, n/30 and expects Sammy to pay within the discount period.On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.
- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Unearned Revenue Jennifers Landscaping Services signed a $400-per-month contract on November 1, 2019, to provide plant watering services for Lola Inc.s office buildings. Jennifers received 4 months' service fees in advance on signing the contract. Required: 1. Prepare Jennifers journal entry to record the cash receipt for the first 4 months. 2. Prepare Jennifers adjusting entry at December 31, 2019. 3. CONCEPTUAL CONNECTION How would the advance payment (account(s) and amounts(s)] be reported in Jennifers December 31, 2019, balance sheet? How would the advance payment [account(s) and amount(s)] be reported in Lolas December 31, 2019, balance sheet?In December 2019, Swanstrom Inc. receives a cash payment of $3,500 for services performed in December 2019 and a cash payment of S4,500 for services to be performed in January 2020. Swanstrom also receives the December utility bill for S600 but does not pay this bill until 2020. For 2019, under the accrual basis of accounting, Swanstrom would recognize: a. $8,000 of revenue and $600 of expense. b. $8,000 of revenue and $0 of expense. c. $3,500 of revenue and $600 of expense. d. $3,500 Of revenue and $0 of expense.
- On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.Worksheet Devlin Company has prepared the following partially completed worksheet for the year ended December 31, 2019: The following additional information is available: (a) salaries accrued but unpaid total 250; (b) the 80 heat and light bill for December has not been recorded or paid; (c) depreciation expense totals 810 on the buildings and equipment; (d) interest accrued on the note payable totals 380 (this will be paid when the note is repaid); (e) the company leases a portion of its floor space to KT Daniel Specialty Company for 50 per month, and KT Daniel has not yet paid its December rent; (f) interest accrued on the note receivable totals 80; (g) bad debts expense is 70; and (h) the income tax rate is 30% on current income and is payable in the first quarter of 2017. Required: 1. Complete the worksheet. (Round to the nearest dollar.) 2. Prepare the companys financial statements. 3. Prepare (a) adjusting and (b) closing entries in the general journal.
