Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue. Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services. Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for. (a) To determine the transaction price. Given information: All the related information is provided in the question document.

Question

On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

Answer 1

Question

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

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On May 31, 2026, Oriole Company paid $3,290,000 to acquire all of the common stock of Pharoah Corporation, which became a division of Oriole. Pharoah reported the following balance sheet at the time of the acquisition: Current assets $846,000 Current liabilities $564,000 Noncurrent assets 2,538,000 Long-term liabilities 470,000 Stockholder's equity 2,350,000 Total assets $3,384,000 Total liabilities and stockholder's equity $3,384,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pharoah was $2,914,000. At December 31, 2026, Pharoah reports the following balance sheet information: Current assets $752,000 Noncurrent assets (including goodwill recognized in purchase) 2,256,000 Current liabilities (658,000) Long-term liabilities (470,000) Net assets $1,880,000 It is determined that the fair value of the Pharoah division is $2,068,000.

The following transactions involving intangible assets of Oriole Corporation occurred on or near December 31, 2025. 1.) Oriole paid Grand Company $520,000 for the exclusive right to market a particular product, using the Grand name and logo in promotional material. The franchise runs for as long as Oriole is in business. 2.) Oriole spent $654,000 developing a new manufacturing process. It has applied for a patent, and it believes that its application will be successful. 3.) In January 2026, Oriole's application for a patent (#2 above) was granted. Legal and registration costs incurred were $247,800. The patent runs for 20 years. The manufacturing process will be useful to Oriole for 10 years. 4.) Oriole incurred $168,000 in successfully defending one of its patents in an infringement suit. The patent expires during December 2029. 5.) Oriole incurred $446,400 in an unsuccessful patent defense. As a result of the adverse verdict, the patent, with a remaining unamortized cost of…

Answer 2

Question

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

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Answer 3

Question

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

Expert Solution & Answer

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Answer 4

Question

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

Expert Solution & Answer

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Answer 5

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

Answer 6

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

Answer 7

Chapter 18, Problem 7P

To determine

Sales revenue: It is the overall income that is earned during the selling of goods and services after deducting returns. It is also known as Net sales revenue.

Cost of goods sold: It is the direct amount used for the production of goods and services. These costs may include the cost of materials and labor cost used in the production of goods and services.

Revenue recognition: GAAP (Generally accepted accounting principle) states that under specific conditions only the revenue is recognized and accounted for.

(a)

To determine the transaction price.

Given information: All the related information is provided in the question document.

Answer 8

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

Answer 9

To determine

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

Answer 10

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

Answer 11

To determine

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.

Answer 12

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Ch. 18 - Prob. 1Q Ch. 18 - Prob. 2Q Ch. 18 - Prob. 3Q Ch. 18 - Prob. 4Q Ch. 18 - Prob. 5Q Ch. 18 - Prob. 6Q Ch. 18 - Prob. 7Q Ch. 18 - Prob. 8Q Ch. 18 - Prob. 9Q Ch. 18 - Prob. 10Q

(b) To prepare: To prepare the journal entries to record the sale. Given information: All the related information is provided in the question document.

(c) To determine the amount of loyalty point revenue to be recognized. Given information: All the related information is provided in the question document.

Chapter 18 Solutions

(b)

To prepare: To prepare the journal entries to record the sale.

Given information: All the related information is provided in the question document.

(c)

To determine the amount of loyalty point revenue to be recognized.

Given information: All the related information is provided in the question document.