Gen Combo Looseleaf Intermediate Accounting; Connect Access Card
10th Edition
ISBN: 9781260696325
Author: David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Textbook Question
Chapter 6, Problem 6.4BE
Allocating the transaction price
• LO5–4
Sarjit Systems sold software to a customer for $80,000. As part of the contract, Sarjit promises to provide “free” technical support over the next six months. Sarjit sells the same software without technical support for $70,000 and a stand-alone six month technical support contract for $30,000, so these products would sell for $100,000 if sold separately. Prepare Sarjit’s
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Problem 18-01 (Part Level Submission)
Waterway Company sells tablet PCs combined with Internet service, which permits the tablet to connect to the Internet anywhere and set up a Wi-Fi hot spot. It offers two bundles with the following terms.
1.
Waterway Bundle A sells a tablet with 3 years of Internet service. The price for the tablet and a 3-year Internet connection service contract is $505. The standalone selling price of the tablet is $263 (the cost to Waterway Company is $160). Waterway Company sells the Internet access service independently for an upfront payment of $296. On January 2, 2020, Waterway Company signed 100 contracts, receiving a total of $50,500 in cash.
2.
Waterway Bundle B includes the tablet and Internet service plus a service plan for the tablet PC (for any repairs or upgrades to the tablet or the Internet connections) during the 3-year contract period. That product bundle sells for $607. Waterway Company provides the 3-year tablet service plan as a…
HW #10 (continued)
JK7 [7 pts] For the satellite contract described in the in-class
exercise, the build plan and spending profile is shown below.
- The contract calls for the following payment profile from the customer
• Payments = 80% of company expenditures in each year, with an additional
milestone payment of $100M in the year that each satellite is completed
• Create a spreadsheet to model the full 10-year program and use it to (a)
annual cash flow (b) IRR for the full 7-satellite, 10-year program
1
2
3
4
5
6
7
8
9
10
S1
10%
30%
40%
20%
S2
30%
50%
20%
S3
30%
50%
20%
S4
30%
50%
20%
S5
30%
50%
20%
S6
30%
50%
20%
S7
30%
50%
20%
Problem 6-2 (Algo) Performance obligations; warranties; option [LO6-2, 6-4, 6-5]
Creative Computing sells a tablet computer called the Protab. The $890 sales price of a Protab Package includes the following:
• One Protab computer.
• A 6-month limited warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements
associated with defective products for up to six months.
• A coupon to purchase a Creative Probook e-book reader for $145, a price that represents a 50% discount from the regular Probook
price of $290. It is expected that 25% of the discount coupons will be utilized.
• A coupon to purchase a one-year extended warranty for $65. Customers can buy the extended warranty for $65 at other times as
well. Creative estimates that 35% of customers will purchase an extended warranty.
• Creative does not sell the Protab without the limited warranty, option to purchase a Probook, and the option to purchase an
extended warranty, but estimates…
Chapter 6 Solutions
Gen Combo Looseleaf Intermediate Accounting; Connect Access Card
Ch. 6 - What are the five key steps a company follows to...Ch. 6 - What indicators suggest that a performance...Ch. 6 - What criteria determine whether a company can...Ch. 6 - We recognize service revenue either at one point...Ch. 6 - What characteristics make a good or service a...Ch. 6 - Prob. 6.6QCh. 6 - What must a contract include for the contract to...Ch. 6 - How might the definition of probable affect...Ch. 6 - When a contract includes an option to buy...Ch. 6 - Prob. 6.10Q
Ch. 6 - Prob. 6.11QCh. 6 - Is a customers right to return merchandise a...Ch. 6 - Prob. 6.13QCh. 6 - Under what circumstances should sellers consider...Ch. 6 - When should a seller view a payment to its...Ch. 6 - What are three methods for estimating stand-alone...Ch. 6 - When is revenue recognized with respect to...Ch. 6 - In a franchise arrangement, what are a franchisors...Ch. 6 - When does a company typically recognize revenue...Ch. 6 - Prob. 6.20QCh. 6 - Prob. 6.21QCh. 6 - Prob. 6.22QCh. 6 - Must bad debt expense be reported on its own line...Ch. 6 - Explain the difference between contract assets,...Ch. 6 - Explain how to account for revenue on a long-term...Ch. 6 - Prob. 6.26QCh. 6 - Prob. 6.27QCh. 6 - Timing of revenue recognition LO53 Estate...Ch. 6 - Allocating the transaction price LO54 Sarjit...Ch. 6 - Existence of a contract LO5-5 Tulane Tires wrote...Ch. 6 - Prob. 6.6BECh. 6 - Prob. 6.7BECh. 6 - Performance obligations; warranties LO55 Vroom...Ch. 6 - Prob. 6.9BECh. 6 - Prob. 6.10BECh. 6 - Variable consideration LO56 Leo Consulting enters...Ch. 6 - Prob. 6.16BECh. 6 - Prob. 6.17BECh. 6 - Prob. 6.18BECh. 6 - Prob. 6.19BECh. 6 - Prob. 6.20BECh. 6 - Prob. 6.21BECh. 6 - Estimating stand-alone selling prices: expected...Ch. 6 - Estimating stand-alone selling prices; residual...Ch. 6 - Prob. 6.24BECh. 6 - Prob. 6.25BECh. 6 - Contract assets and contract liabilities LO58...Ch. 6 - Long-term contract; revenue recognition over time;...Ch. 6 - Prob. 6.34BECh. 6 - Long-term contract; revenue recognition upon...Ch. 6 - Long-term contract; revenue recognition; loss on...Ch. 6 - Prob. 6.1ECh. 6 - Allocating transaction price LO54 Video Planet...Ch. 6 - Prob. 6.4ECh. 6 - Prob. 6.6ECh. 6 - Prob. 6.7ECh. 6 - Prob. 6.9ECh. 6 - Variable considerationmost likely amount; change...Ch. 6 - Variable considerationexpected value; change in...Ch. 6 - Prob. 6.12ECh. 6 - Prob. 6.13ECh. 6 - Prob. 6.14ECh. 6 - Approaches for estimating stand-alone selling...Ch. 6 - FASB codification research LO56, LO57 Access the...Ch. 6 - FASB codification research LO58 Access the FASB...Ch. 6 - Long-term contract; revenue recognition over time;...Ch. 6 - Prob. 6.1PCh. 6 - Prob. 6.2PCh. 6 - Prob. 6.3PCh. 6 - Prob. 6.5PCh. 6 - Variable consideration; change of estimate LO53,...Ch. 6 - Prob. 6.7PCh. 6 - Prob. 6.8PCh. 6 - Prob. 6.10PCh. 6 - Long-term contract; revenue recognition over time...Ch. 6 - Prob. 6.1DMPCh. 6 - Judgment Case 52 Satisfaction of performance...Ch. 6 - Judgment Case 53 Satisfaction of performance...Ch. 6 - Prob. 6.5DMPCh. 6 - Prob. 6.7DMPCh. 6 - Prob. 6.9DMPCh. 6 - Prob. 6.10DMPCh. 6 - Prob. 6.12DMPCh. 6 - Prob. 6.13DMPCh. 6 - Prob. 6.14DMPCh. 6 - Prob. 6.15DMPCh. 6 - Prob. 1CCTC
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Module4_Lease.pdf x 16 / 19 100% Problem 14-19 (IFRS) Liza Company is a car dealer. On January 1, 2020, the entity entered into a finance lease with a customer under which the customer would pay P200,000 on January 1 each year for 5 years, commencing in 2020. The cost of the car is P600,000 and the cash selling price was P750,000. The entity paid legal fees of P20,000 to a law firm in connection with the arrangement of the lease. What amount of gross profit on sale should be recognized for the year ended December 31, 2020? a. 150,000 b. 130,000 20,000 d. c.arrow_forwardProblem 12 On January 1, GEN enters into a contract with LORD for the sale of a high-end security scanner for P630,000. The contract includes a put option the obliges GEN to repurchase the scanner machine from LORD for P567,000 on or before December 31. The market value is expected to be P495,000 on December 31. LORD pays GEN P630,000 on January 1. The transaction should be accounted for as a: A. Sale C. No sale/lease B. Lease D. Cannot be determined Problem 13 Noreen INC a truck dealer, sells a truck on January 1, 2019, to Mendoza for P3,000,000. Noreen INC agrees to repurchase the truck on December 31, 2020 for P3,630,000. 1. Assuming a 10% is imputed in the agreement, how much is the liability of Tom Co on January 1, 2019? A. 1,500,000 C. 3,000,000 B. 1,815,000 D. 3,630,000 2. Using the information above, what is the interest expense for 2019? A. None C. 330,000 B. 300,000 D. 630,000 3. How much should NOREEN INC record interest and retirement of its liability to MENDOZA INC…arrow_forwardQuestion 36 A company has daily purchases of $10,000 from its supplier. The supplier offers trade credit under the following terms: 3/20, net 50 days. The company finally chooses to pay on time (pay in the 50th day) but not to take the discount. We assume 365 days per year. What is the average level of the company’s free trade credit? ______ $30,000 $170,000 $200,000 $300,000 Question 37 Based on the information from Question 36, what is the average level of the company’s total trade credit? $170,000 $200,000 $300,000 $500,000 38 . Based on the information from Question 36, what is the average level of the company’s costly trade credit? $170,000 $200,000 $300,000 $500,000 Question 39 Based on the information from Question 36, what is the nominal annual cost of the firm’s costly trade credit? 28.6% 29.3% 33.5%…arrow_forward
- 2022 SP CSR342 Week 6 Assignment Assignment 1. A. John will purchase Equinox EV ($35,000). John's credit score (FICO® Score) is 750. Based on the credit score, John can get 60 months auto-loan from WL Land Bank with 4.0% APR. John will pay the down payment as much as $5,000. B. Smith will purchase Equinox EV ($35,000). Smith's credit score (FICO Score) is 625. Based on the credit score, Smith can get 60 months auto-loan from WL Land Bank with 6.5% APR. Smith will pay the down payment as much as $5,000. [1] Explain who will pay more and how much pay more [no word limit] Correct answer existed but close answer will be considered as good; file on Brightspace (Excel WorkSheet 6.8). To compare John and Smith's cases, utilize the exc Even if it is named as mortgage amortization table, the auto payment (amortization plan) is totally same. Your answer should be like "John will pay less/more than Smith $-- per a month."arrow_forwardces W [The following information applies to the questions displayed below.] Nick's Novelties, Incorporated, is considering the purchase of new electronic games to place in its amusement houses. The games would cost a total of $310,000, have a fifteen-year useful life, and have a total salvage value of $31,000. The company estimates that annual revenues and expenses associated with the games would be as follows: Revenues Less operating expenses: Commissions to amusement houses Insurance Depreciation Maintenance Net operating income Exercise 12-8 Part 1 (Algo) Complete this question by entering your answers in the tabs below. Req 1A $ 90,000 58,000 18,600 70,000 Required: 1a. Compute the payback period associated with the new electronic games. 1b. Assume that Nick's Novelties, Incorporated, will not purchase new games unless they provide a payback period of five years or less. Would the company purchase the new games? Req 1B.arrow_forwardDiscussion Question 21 at the end of Chapter 18 after Key Terms The Hawk Corporation builds yachts. The vessels it currently produces are practically identical and are completed in approximately 8 months. A customer has approached Hawk about constructing a larger yacht that would take approximately 15 months to complete. What are the tax implications of accepting the contract proposal? To fully answer this question, please address the following in your post. What is the definition of a long - term contract? Which long term contract method is required to be used by tax regulations? What is the process used to compute income using the required method?arrow_forward
- QUESTION 3 A manufacturer sells his final product for R300 plus VAT (@15%) to a wholesaler. The wholesaler sells the product at a mark-up of 20% above cost to the manufacturer. If the retailer's mark-up on cost is 25%, the final consumer will pay.......(including VAT). OA. R414 O B. R517.50 O C. R450.00 O D. R360.00arrow_forwardYou purchase one IBM March 210 put contract for a put premium of $13. The maximum profit that you could gain from this strategy is O $19,700 $21,000 O $1,300 O $210arrow_forwardWord Problem Question 3: (You have to submit an image of your FULL solution to the question in eConestoga -> Course Tools -> Assignments [Midterm Submission]) A loan (promissory note) of $8,200 was made. It is to be paid back in 4 years with interest of 3.65% compounded quarterly. What would be the appropriate price to pay for the contract 6 months after the original contract date to yield the buyer 7.85% compounded semi-annually? Round you final answer to two decimals. Do not round intermediate steps. Do not include the dollar sign ($) in your answer. For example, $89.36 input as 89.36. Your Answer: Answerarrow_forward
- Page INSTRUCTIONS: esc 2 A 7 4x 4 1 + | 电器 5 2 0 3. Hampton Manufacturing began operations in January 2024. Hampton sells computers that carry a two-year manufacturer's warranty against defects in workmanship. Hampton's management projects that 2% of the computers will require repair during the first year of the warranty, while approximately 6% will require repair during the second year of the warranty. The computers sell for $1,000 each. The average cost to repair a computer is $300. The company sells 100% of the computers to retail customers who must pay a 7% sales tax. Sales and warranty information for 2024 and 2025 are as follows: I 9 LO 2024: Sold 400 computers on account; incurred warranty expenditures of $2,000. 2025: Sold 800 computers on account; incurred warranty expenditures of $15,000. 3 a. Prepare journal entries that summarize the sales and all aspects of the warranty for 2024. b. Prepare journal entries that summarize the sales and all aspects of the warranty for 2025.…arrow_forwardter 6 Exercises 1 pok int i int 9 ences Exercise 6-19 (Algo) Long-term contract; revenue recognition over time and at a point in time [LO6-9] Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,600,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: Costs incurred during the year. Estimated costs to complete as of 12/31 Billings during the year. Cash collections during the year Complete this question by entering your answers in the tabs below. Required 1 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract…arrow_forwardProblem 6.34 Tirade Owens, a professional athlete, currently has a contract that will pay him a large amount in the first year of his contract and smaller amounts thereafter. He and his agent have asked the team to restructure the contract. The team, though reluctant, obliged. Tirade and his agent came up with a counter offer. What are the present values of each of the contracts using a 14 percent discount rate? Year Current Contract Team's Offer Counter offer $7,418,672 $3,635,149 $4,822,137 2 $4,508,172 $4,733,581 $9,331,916 3 $2,672,364 $3,794,757 $3,580,968 4 $7,254,956 $15,598,155 $11,172,632 What is the present values of Current Contract using a 14 percent discount rate? (Round answer to 2 decimal places, e.g. 15.25.) Present valuearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education
Revenue recognition explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=816Q6pOaGv4;License: Standard Youtube License