Requirement – 1
The revenue recognition principle
The revenue recognition principle refers to the revenue that should be recognized in the time period, when the performance obligation (sales or services) of the company is completed.
Toindicate: The amount of revenue reported in the Company T financial statement for the fiscal year ended January 30, 2016.
Requirement – 2
Toexplain: Whether Company T records their revenue at a point in time or over a period of time.
Requirement – 3
Todiscuss: The manner in which Company T’s revenue and net income is affected, when the company does not know at the time a sale is made and which items will be returned.
Requirement – 4
To explain: Whether Company T is a principal or an agent when the commission earned on sale generated by leased department.
Requirement – 5
To explain: The timing of revenue recognition in gift card sales.
Requirement – 6
To discuss: The manner in which T Company records the consideration received from vendors.
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Chapter 5 Solutions
Intermediate Accounting
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- 1. block 2 2018 In relation to the reference period t1, Schmalisch GmbH shows an operating result of +88 T€, a financial result of -19 T€ and a tax result of -31 T€. All results were determined based on commercial law regulations. In addition, you can see from the information in the appendix that at t1 the operating result was charged with an accidental uninsured cargo of €18k. Let us assume that the internal control system in the company will ensure in the future that all cargoes are insured! How high is the annual surplus under commercial law at t1 and how high is the sustainable annual output at t1? Present your calculations in an understandable way Why does it make sense to determine a sustainable annual result?arrow_forwardProblem 6-55 (LO. 3) For 2021, MSU Corporation has $500,000 of adjusted taxable income, $22,000 of business interest income, and $120,000 of business interest expense. It has average annual gross receipts of more than $26,000,000 over the prior three taxable years. a. What is MSU's interest expense deduction for 2021?$fill in the blank 1 b. How much interest expense can be deducted for 2021 if MSU's adjusted taxable income is $300,000?$fill in the blank 2arrow_forward3. Dell Technologies Inc. the following information for December 2019-20212019 2020 2021Pretax Accounting Income (2,361) (4) 3,670Tax Rate for 2019-2021 – 35% a. Dell paid in advance for Insurance for 3 years beginning 2019, $15,000.b. Unrealised Gain was recorded in 2020 for an investment but it was not sold until 2021, $6,000c. Dell recorded bad debt expense of $4,000 in 2021 which the government did not recognize.d. Interest received in 2020 for $4,500 was from a government bond investment. Requirements:1. Identify the permanent vs the temporary differences. 2. Prepare a schedule showing the calculation of the taxable income for both 2019 - 2021. 3. Prepare journal entries for each year (2019 – 2021) 4. Show how any 2021 tax related amounts should be classified and reported in the 2021 balance sheet.arrow_forward
- Immediate Accounting ll Ch 16 3. During 2024, its first year of operations, Baginski Steel Corporation reported a net operating loss of $360,000 for financial reporting and tax purposes. The enacted tax rate is 25%. Required: Prepare the journal entry to recognize the income tax benefit of the net operating loss. Assume the weight of available evidence suggests that future taxable income will be sufficient to benefit from future deductible amounts arising from the net operating loss carryforward. Show the lower portion of the 2024 income statement that reports the income tax benefit of the net operating loss. Required 1 Record 2024 income tax benefit from operating loss Transaction General Journal Debit Credit 1arrow_forwardE4.17 (LO 2, 3, 5) The following information was taken from the records of Roland Carlson Inc. for the year 2020: Income tax applicable to income from continuing operations $187,000, Income tax applicable to loss on discontinued operations $25,500Gain on sale of equipment $ 95,000 Cash dividends declared $ 150,000Loss on discontinued operations 75,000 Retained earnings January 1, 2020 600,000Administrative expenses 240,000 Cost of goods sold 850,000Rent revenue 40,000 Selling expenses 300,000Loss on write-down of inventory 60,000 Sales revenue 1,900,000 Shares outstanding during 2020 were 100,000. Prepare a multiple step income statement (including earnings per share) and a statement of…arrow_forwardJ 2 The accounts receivable amount for GIRAFE Ltd. as of June 30, 2022, was $5.564 million. The corporation wrote down a $450,000 bad debt from a local client whose business suffered severely as a result of COVID-19 difficulties in the previous financial year. At the time, it was anticipated that this contribution would not be recouped, so a provision for it was created in the accounts. The customer informed GIRAFE Ltd on July 1, 2022, that they are now in a position to pay off their obligation and will send payment in full on July 31, 2022.arrow_forward
- Serial Problem Business Solutions LO P1, A1 Selected ledger account balances for Business Solutions follow. For Three MonthsEnded December 31, 2019 For Three MonthsEnded March 31, 2020 Office equipment $ 8,100 $ 8,100 Accumulated depreciation—Office equipment 405 810 Computer equipment 20,000 20,000 Accumulated depreciation—Computer equipment 1,250 2,500 Total revenue 31,334 44,900 Total assets 83,360 121,668 Required:1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?3. Compute the three-month total asset turnover for Business…arrow_forwardLO.2 Oak Corporation has the following general business credit carryovers. If the general business credit generated by activities during 2019 equals 36,000 and the total credit allowed during the current year is 60,000 (based on tax liability), what amounts of the current general business credit and carryovers are utilized against the 2019 income tax liability? What is the amount of unused credit carried forward to 2020?arrow_forwardCurrent liabilities Bon Nebo Co. sold 25,000 annual subscriptions of Bjorn for 85 during December 20Y5. These new subscribers will receive monthly issues, beginning in January 20Y6. In addition, the business had taxable income of 840,000 during the first calendar quarter of 20Y6. The federal tax rate is 40%. A quarterly tax payment will be made on April 12, 20Y6. Prepare the current liabilities section of the balance sheet for Bon Nebo Co. on March 31, 20Y6.arrow_forward
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