Concept explainers
Requirement – 1
Performance obligation:
Performance obligation is the promise made by the seller to supply the goods and service to the customer on or before the contract.
Variable consideration:
Variable consideration refers to the uncertain transaction price that depends upon the outcome of future events.
Deferred revenues:
Collection of cash in advance to render service or to deliver goods in future is known as unearned revenues. These unearned revenues are considered as liabilities until they are earned. For the portion of rendered services or delivered goods, revenues would be recognized by way of passing an
Rules of Debit and Credit:
Following rules are followed for debiting and crediting different accounts while they occur in business transactions:
- Debit, all increase in assets, expenses and dividends, all decrease in liabilities, revenues and stockholders’ equities.
- Credit, all increase in liabilities, revenues, and stockholders’ equities, all decrease in assets, expenses.
To prepare: The
Requirement – 2
To prepare: The journal entry for SR would record on May 31 to recognize May month revenue and any necessary revision in its estimates bonus receivable.
Want to see the full answer?
Check out a sample textbook solutionChapter 5 Solutions
Intermediate Accounting
- y .22. Write a max one page reflection on machine reasoning from an accounting , tax or audit viewpoint. Cover how you think this technology will change your chosen field. Make sure you cite at least 3 sources. (Must be credible).arrow_forward6. Determine the maximum operating income possible with the expanded plant.$fill in the blank 8 7. If the proposal is accepted and sales remain at the current level, what will the operating income or loss be for the following year?$fill in the blank 9arrow_forwardA net present value analysis used to evaluate a proposed equipment acquisition indicated a 7,900 net present value. What is tile meaning of the 7,900 as it relates to the desirability of the proposal?arrow_forward
- EA16. LO 11.4 Project B cost $5,000 and will generate after-tax net cash inflows of $500 in year one, $1,200 in year two, $2,000 in year three, $2,500 in year four, and $2,000 in year five. What is the NPV using 8% as the discount rate?arrow_forwardCH 6 #4 The DEF Company prefers to finance investments internally to the extent possible. However, it has adopted the following policies, which are applied unless there are significant qualitative considerations that justify an exception for a particular project. Investments are not accepted unless they can earn at least 11.1 percent after taxes on a discounted cash flow (DCF) basis, even if excess funds are available. Investments are not rejected if they will earn 25 percent or more after taxes on a discounted cash flow (DCF) basis, even if internally generated funds are not available. The following table shows the cash flows for a series of independent investments. Use the DEF Company’s criteria to classify each investment as: A = must accept; R = must reject; or U = uncertain.arrow_forwardCh 5. ABC Company has the following mutually exclusive projects. Year Project A Project B 0 -$19,520 -$16,800 1 11,500 9,500 2 8,750 7,100 3 2,500 3,500 If the company uses the NPV method to rank these two projects, which project should be chosen if the appropriate discount rate is 15 percent? Group of answer choices Project A Project Barrow_forward
- Ch 5. ABC Company has the following mutually exclusive projects. Year Project A Project B 0 -$19,520 -$16,800 1 11,500 9,500 2 8,750 7,100 3 2,500 3,500 If the company uses the Profitability Index to rank these two projects, which project should be chosen if the appropriate discount rate is 15 percent? Group of answer choices Project B Both projects Project A Neither projectsarrow_forwardMcqs 11. There are ________________ basic decisions are involved while performing the financial management responsibilities. a. 1b. 2c. 3d. 512. The company’s management has been planning to launch a new project to get the competitive advantage over their competitors. According to the forecasts of their finance and budgeting department total cost they will be required for that project will be approximately Rs. 3.5 Millions. In their annual general meeting, they have decided to utilize their undistributed profits which are available. Which of the financial management the company’s management has taken in annual general meeting?a. Investment Decisionb. Financing Decisionc. Assets Management Decisiond. Both (a) and (b) 13. The company’s cash flows in project A for the accounting year 2013 was not showing positive results. For that the management has conducted a survey to find out the possible reasons for that bad performance. The survey results show that the major reason behind the…arrow_forwardPls answer number 15 with solutions An entity is the defendant in a patent infringement lawsuit. The entity’s lawyers believe there is a 30% chance that the court will dismiss the case and the entity will incur no outflow of economic benefits. However, if the court rules in favor of the claimant, the lawyers believe that there is a 20% chance that the entity will be required to pay damages of ₱800,000 (the amount sought by the claimant) and an 80% chance that the entity will be required to pay damages of ₱400,000 (the amount that was recently awarded by the same judge in a similar case). Other outcomes are unlikely. The court is expected to rule in late December 20x2. There is no indication that the claimant will settle out of court. A 7% risk adjustment factor to the probability-weighted expected cash flows is considered appropriate to reflect the uncertainties in the cash flow estimates. An appropriate discount rate is 10% per year. How much is the provision for lawsuit at…arrow_forward
- Ch 5. ABC Company has the following mutually exclusive projects. Year Project A Project B 0 -$19,520 -$16,800 1 11,500 9,500 2 8,750 7,100 3 2,500 3,500 If the company’s payback period is 2 years, which of these projects should be chosen? Group of answer choices Project A Neither Projects Both Projects Project Barrow_forwardA3 5b 5. We have two independent and mutually exclusive projects, A and B. Project A requires an initial investment of $1500, and will yield $800 of cash inflows for the next three years. Project B requires an initial investment of $5000, and will yield $1,500 of cash inflows for the next five years. The required return on each project is 10%. b. What is the problem with using the NPV investment criterion in this case? What alternative criterion should be used?arrow_forwardpm.5 Find the expected rate of return using the three estimates provided in the table below for a project. Data Pessimistic Most Likely Optimistic First Cost, $ 1,052 1,000 1000 Benefits / Year 190 198 200 Life , Years 9 12 12 Salvage Value 0 0 100 A. 11.93% B. 16.33% C. 13.17% D. 14.20%arrow_forward
- Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE LAccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsFinanceISBN:9781337552127Author:Ulric J. Gelinas, Richard B. Dull, Patrick Wheeler, Mary Callahan HillPublisher:Cengage Learning