Chapter 8.4, Problem 1CC

Explain the accounting for contract modifications.

Under which of the following circumstance a contract does not exist   a-  The contract was not approved in a written form b- The parties of the contract have reached unanimous consent regarding termination of the contract c- The contract has no fixed duration and can be terminated or modified by either party at any time d- None of them

possibilities and restrictions on, bidders withdrawing their bids for private and for public work: A. Before bids are opened B. After bids are opened, but before a contract is awarded C. After a contract is awarded, but before a formal agreement executed by the parties

Explain whether the following statement is true: “Duress is an unlawful threat of harm or injury made by one contracting party or someone acting for thatparty and which causes the other party to enter into the contract. It results in no consensus betweenthe parties and a void contract.”

Who may institute action for annulment of voidable contracts? Briefly discuss.

When it is probable that total contract costs will exceed total contract revenue, how shall it be accounted for? Group of answer choices The expected loss shall be recognized as an expense immediately only when the outcome of a construction contract cannot be estimated reliably. The expected loss shall be recognized as an expense immediately regardless of the certainty or uncertainty of the outcome of a construction contract. The expected loss shall be accounted for based on company’s policy. The expected loss shall be recognized as an expense by reference to the state of completion of the contract activity at the end of the reporting period when the outcome of a construction contract cannot be estimated reliably.      PreviousNext

The cost-plus approach:   a. refers to contracts that are modified from their original terms during the course of the contract.   b. refers to contracts where the contractor is not expected to recover all costs incurred in completing the project.   c. is not allowed under ASC Topic 606 guidance for revenue recognition.   d. uses an assumed reasonable profit margin to determine the stand-alone price.

Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is true regarding contracts with customer options?   In some cases where customers have an option to acquire additional goods or services, an evaluation is required to determine if the option creates an additional performance obligation.   An additional performance obligation is created if the customer could obtain the same rights to additional goods or services without entering the contract.   An additional performance obligation is created if the option provides the customer a right to purchase the goods or services at the stand-alone selling price for those goods or services.   It is generally not considered a performance obligation when a retailer grants a "customer appreciation dividend" to a customer.

Which of the following statements is true regarding contracts in ASC Topic 606 guidance for revenue recognition?   Contracts need to be legally enforceable to be considered under ASC Topic 606.   Contracts need to be in written form to be considered under ASC Topic 606.   No consideration can be received before a contract exists.   No price concessions can be made to an existing contract.