On November 1, 2021, Crane Farm entered into a contract to buy a $138000 harvester from John Deere. The contract required Crane Farm to pay $138000 in advance on November 1, 2021. The harvester (cost of $98000) was delivered on November 30, 2021. The journal entry to record the delivery of the equipment includes a

On November 1, 2021, Crane Farm entered into a contract to buy a $138000 harvester from John Deere. The contract required Crane Farm to pay $138000 in advance on November 1, 2021. The harvester (cost of $98000) was delivered on November 30, 2021. The journal entry to record the delivery of the equipment includes a

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 26E

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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?
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