would these be considered as a single performance obligation for financial accounting purposes (under AASB 15)? Or would they be considered separate performance obligations? why?
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If an airway has three services; flight transport, frequent flyer miles and ancillary services (any additional special service request (SSR) that can be requested to enhance a flight journey), would these be considered as a single performance obligation for financial accounting purposes (under AASB 15)? Or would they be considered separate performance obligations? why?
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- Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services. That core principle is implemented by (1) identifying a contract with a customer, (2) identifying the performance obligations in thecontract, (3) determining the transaction price of the contract, (4) allocating that price to the performanceobligations, and (5) recognizing revenue when (or as) each performance obligation is satisfiedWe recognize service revenue either at one point in time or over a period of time. Explain the rationale for recognizing service revenue using these two approaches.Question 1 Per GASB pronouncements, information on “service efforts and accomplishments”.... Multiple choice : a. Should be reported in the “management's discussion and analysis”b. Should be reported in the notes to the financial statementsc. Should be reported as “required supplementary information”d. Need not be reported
- Pick one company example in TABLE 1 and provide a conjecture about why the company recognizes revenue in that manner per ASC 606.?Case Questions1. Consider the principles, assumptions, and constraints of Generally AcceptedAccounting Principles (GAAP). Define the revenue recognition principle andexplain why it is important to users of financial statements.2. Consider the Sithe Energies contract described in the case. Does the account-ing for this contract provide an example of how Enron violated the revenuerecognition principle? Why or why not? Please be specific.3. Consult Paragraphs .06–.07 of AU Section 319. Based on the case informa-tion, do you believe that Enron had established an effective system of inter-nal control over financial reporting related to the contract revenue recordedin its financial statements? Why or why not? 4. As an auditor, what type of evidence would you want to examine to deter-mine whether Enron was inappropriately recording revenue from the SitheEnergies contract?5. Consider the role of the Enron employee who was responsible for applyingMTM accounting rules to electric power…Which of the following is not included in the FASB's 5-step model for evaluating when a company should recognize revenue? Identify the contract with a customer. Identify the performance obligations in the contract. Determine the transaction price. Recognize revenue when cash payment is received.
- Explain the revenue recognition process when a performance obligation is satisfied over time according to IFRS 15-Revenue from Contracts with Customers.In accordance with IFRS 15, customer loyalty awards on the goods or services sold, the transaction price received or receivable by the entity must be allocated between the goods or services sold and the customer loyalty awards redeemable in the future partly as revenue and partly as a liability. must be recognized in full as a liability. must be recognized in full as revenue. must be recognized in full as an expense.Choose the correct. How are anticipated administrative expenses reported on a statement of financial affairs?a. As a footnote until actually incurred.b. As a liability with priority.c. As a partially secured liability.d. As an unsecured liability.
- The FASB has established a Five-Step process to recognize revenue. Which of the following is not one of those steps? A. Ability to identify the contract with the customer. B. Determination thatcollection of the entitled contractual consideration from the customer is probable. C. Properly identify all of the performance obligations within the contract. D. Ability to determine the transaction price. E. Properly identify all of the deliverables and allocate the transaction price to each.S1: Only agency sales and operating expenses determines the sales agency’sprofitability. S2: The primary advantages of the system described is that it issimple to establish and maintain. A. Only S2 is correct.B. Both statements are incorrect.C. Both statements are correct.D. Only S1 is correct.The third step in the process for revenue recognition is to (Enter 1, 2, 3, or 4 that represents the correct answer): determine the separate performance obligations in the contract. allocate transaction price to the separate performance obligations. determine the transaction price. determine the amount of revenue when each performance obligation is satisfied.
