INTERMEDIATE ACCOUNTING
8th Edition
ISBN: 9780078025839
Author: J. David Spiceland
Publisher: McGraw-Hill Education
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Question
Chapter 5, Problem 5.8BYP
Requirement – 1
To determine
Principal
Principal is the legal owner of goods or service which is transferred to the customer for legal consideration.
Agent
Agent is a facilitator for transferring goods and service from seller to buyers. Agent receives commission from principal for the service rendered.
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.
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.
Case summary:
AC.Com sells the used products which are collected from different suppliers. A customer purchases a used bicycle from AC.Com for $300. AC.Com agrees to pay the supplier $200, and the bicycle is shipped from the supplier to the customer directly.
To determine: The amount of revenue recognized at the time of the sales to the customer, and assume AC.Com takes control on used bicycle.
Requirement – 2
To determine
The amount of revenue recognized at the time of the sales to the customer, and assume AC.Com never takes control on used bicycle.
Requirement – 3
To determine
The amount of revenue recognized at the time of the sales to the customer, and assume AC.Com promises to pay $200 to the supplier.
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Students have asked these similar questions
11:/13
Problem 2-2U S)
William Company operates a customer loyalty program. T
entity grants loyalty points for goods purchased.
The loyalty points can be used by the customers in exchane
for goods of the entity. The pointa have no expiry date.
During 2020, the entity issued 100,000 award credits and
expects that 80% of these award credits shall be redeemed
The total stand-alone selling price of the award credita
granted is reliably measured at P2,000,000.
In 2020, the entity sold goods to customers for a total
consideration of P8,000,000 based on stand-alone selling
price.
The award credits redeemed and the total award credits
expected to be redeemed each year are as follows:
Redeemed
Expected to be redeemed
2020
2021
30,000
15,000
80%
90%
1. What is the revenue from points for 2020?
1,600,000
b.
a.
1.500,000
600,000
d.
480,000
2. What is the revenue from points for 2021?
a.
240,000
b.
200,000
120,000
04.29
d
ing Enabled: Chapter 7 Required Homewor... i
Albany International Corporation, originally the Albany Felt Company, is an industrial-goods company based in Rochester, New
Hampshire. On June 30, Year 1, Albany International sold merchandise to its good customer ABC Inc. and accepted a noninterest-
bearing note in exchange. The note requires payment of $35,000 on March 31, Year 2. The fair value of the merchandise exchanged is
$33,950. Albany International views the financing component of this contract as significant.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required:
1. Please prepare journal entries for Albany International to record the sale of merchandise (please omit any entry that might be
required for the cost of the goods sold), any December 31, Year 1 interest accrual, and the March 31, Year 2 collection.
2. What is the effective interest rate on the note?
Prepare journal entries to record the sale of merchandise (omit any entry…
Note 1 – Sale of product with right of return
On 1 April 20X7 Delta sold a product to a customer for $121,000. This amount is payable on 30 June 20X9. The manufacturing cost of the product for Delta was $80,000. The customer had a right to return the product for a full refund at any time up to and including 30 June 20X7. At 1 April 20X7, Delta had no reliable evidence regarding the likelihood of the return of the product by the customer. The product was not returned by the customer before 30 June 20X7 and so the right of return for the customer expired. On both 1 April 20X7 and 30 June 20X7, the cash selling price of the product was $100,000. A relevant annual rate to use in any discounting calculations is 10%.
Explain and show how the transactions in notes 1 and 2 would be reported in the financial statements of Delta for the year ended 30 September 20X7.
Chapter 5 Solutions
INTERMEDIATE ACCOUNTING
Ch. 5 - What are the five key steps a company follows to...Ch. 5 - What indicators suggest that a performance...Ch. 5 - What criteria determine whether a company can...Ch. 5 - We recognize service revenue either at one point...Ch. 5 - What characteristics make a good or service a...Ch. 5 - Prob. 5.6QCh. 5 - What must a contract include for the contract to...Ch. 5 - When a contract includes an option to buy...Ch. 5 - Prob. 5.9QCh. 5 - Prob. 5.10Q
Ch. 5 - Is a customers right to return merchandise a...Ch. 5 - Prob. 5.12QCh. 5 - Under what circumstances should sellers consider...Ch. 5 - When should a seller view a payment to its...Ch. 5 - What are three methods for estimating stand-alone...Ch. 5 - When is revenue recognized with respect to...Ch. 5 - In a franchise arrangement, what are a franchisors...Ch. 5 - When does a company typically recognize revenue...Ch. 5 - Prob. 5.19QCh. 5 - Prob. 5.20QCh. 5 - Must bad debt expense be reported on its own line...Ch. 5 - Explain the difference between contract assets,...Ch. 5 - Explain how to account for revenue on a long-term...Ch. 5 - Prob. 5.24QCh. 5 - Prob. 5.25QCh. 5 - Prob. 5.26QCh. 5 - Prob. 5.27QCh. 5 - Prob. 5.28QCh. 5 - What are the two general criteria that must be...Ch. 5 - Explain why, in most cases, a seller recognizes...Ch. 5 - Revenue recognition for most installment sales...Ch. 5 - Prob. 5.32QCh. 5 - How does a company report deferred gross profit...Ch. 5 - Prob. 5.34QCh. 5 - Briefly describe the guidelines for recognizing...Ch. 5 - Prob. 5.36QCh. 5 - Briefly describe the guidelines provided by GAAP...Ch. 5 - Prob. 5.1BECh. 5 - Timing of revenue recognition LO53 Estate...Ch. 5 - Prob. 5.3BECh. 5 - Allocating the transaction price LO54 Sarjit...Ch. 5 - Prob. 5.5BECh. 5 - Performance obligations; warranties LO55 Vroom...Ch. 5 - Prob. 5.7BECh. 5 - Prob. 5.8BECh. 5 - Prob. 5.9BECh. 5 - Prob. 5.10BECh. 5 - Prob. 5.11BECh. 5 - Variable consideration LO56 Leo Consulting enters...Ch. 5 - Prob. 5.13BECh. 5 - Prob. 5.14BECh. 5 - Prob. 5.15BECh. 5 - Payment s by the seller to the customer LO56...Ch. 5 - Estimating stand-alone selling prices: adjusted...Ch. 5 - Estimating stand-alone selling prices: expected...Ch. 5 - Estimating stand-alone selling prices; residual...Ch. 5 - Prob. 5.20BECh. 5 - Prob. 5.21BECh. 5 - Prob. 5.22BECh. 5 - Prob. 5.23BECh. 5 - Prob. 5.24BECh. 5 - Contract assets and contract liabilities LO58...Ch. 5 - Prob. 5.26BECh. 5 - Long-term contract; revenue recognition over time;...Ch. 5 - Prob. 5.28BECh. 5 - Long-term contract; revenue recognition upon...Ch. 5 - Long-term contract; revenue recognition; loss on...Ch. 5 - Prob. 5.35BECh. 5 - Prob. 5.36BECh. 5 - Prob. 5.37BECh. 5 - Prob. 5.38BECh. 5 - Prob. 5.39BECh. 5 - Revenue recognition; software contracts under IFRS...Ch. 5 - Prob. 5.41BECh. 5 - BE 5–31
Receivables and inventory turnover...Ch. 5 - Prob. 5.32BECh. 5 - Prob. 5.33BECh. 5 - Prob. 5.34BECh. 5 - Prob. 5.1ECh. 5 - Ski West, Inc., operates a downhill ski area near...Ch. 5 - Allocating transaction price LO54 Video Planet...Ch. 5 - Prob. 5.4ECh. 5 - Prob. 5.5ECh. 5 - Prob. 5.6ECh. 5 - Prob. 5.7ECh. 5 - On May 1, 2016, Meta Computer, Inc., enters into a...Ch. 5 - Prob. 5.9ECh. 5 - Variable considerationmost likely amount; change...Ch. 5 - Variable considerationexpected value; change in...Ch. 5 - Prob. 5.12ECh. 5 - Approaches for estimating stand-alone selling...Ch. 5 - E 5–14
FASB codification research
LO5–6,...Ch. 5 - Prob. 5.15ECh. 5 - FASB codification research LO58 Access the FASB...Ch. 5 - Prob. 5.17ECh. 5 - Prob. 5.18ECh. 5 - Prob. 5.19ECh. 5 - Prob. 5.20ECh. 5 - Prob. 5.21ECh. 5 - Prob. 5.22ECh. 5 - Prob. 5.23ECh. 5 - Prob. 5.24ECh. 5 - Prob. 5.25ECh. 5 - Prob. 5.26ECh. 5 - Prob. 1CPACh. 5 - Prob. 2CPACh. 5 - Prob. 3CPACh. 5 - Prob. 4CPACh. 5 - Prob. 5CPACh. 5 - Prob. 6CPACh. 5 - Prob. 7CPACh. 5 - Prob. 8CPACh. 5 - Prob. 1CMACh. 5 - Prob. 5.1PCh. 5 - Prob. 5.2PCh. 5 - Prob. 5.3PCh. 5 - Prob. 5.4PCh. 5 - Prob. 5.5PCh. 5 - Prob. 5.6PCh. 5 - Prob. 5.7PCh. 5 - Prob. 5.8PCh. 5 - Prob. 5.9PCh. 5 - Prob. 5.10PCh. 5 - Prob. 5.11PCh. 5 - Prob. 5.12PCh. 5 - Prob. 5.13PCh. 5 - Prob. 5.14PCh. 5 - Prob. 5.15PCh. 5 - Prob. 5.16PCh. 5 - Prob. 5.17PCh. 5 - Prob. 5.18PCh. 5 - Prob. 5.19PCh. 5 - Prob. 5.20PCh. 5 - Prob. 5.21PCh. 5 - Prob. 5.22PCh. 5 - Prob. 5.23PCh. 5 - Prob. 5.1BYPCh. 5 - Judgment Case 52 Satisfaction of performance...Ch. 5 - Judgment Case 53 Satisfaction of performance...Ch. 5 - Prob. 5.4BYPCh. 5 - Prob. 5.5BYPCh. 5 - Prob. 5.6BYPCh. 5 - Prob. 5.8BYPCh. 5 - Prob. 5.9BYPCh. 5 - Prob. 5.10BYPCh. 5 - Prob. 5.11BYPCh. 5 - Prob. 5.12BYPCh. 5 - Prob. 5.13BYPCh. 5 - Prob. 5.15BYPCh. 5 - Prob. 5.16BYPCh. 5 - Prob. 5.17BYPCh. 5 - Prob. 5.18BYPCh. 5 - Prob. 5.19BYPCh. 5 - Prob. 5.23BYP
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