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.

Question

Want to see the full answer?

Answer 1

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

Can you solve this general accounting problem using accurate calculation methods?

I need guidance with this general accounting problem using the right accounting principles.

Can you explain the correct approach to solve this general accounting question?

Answer 2

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 3

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

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.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 5

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.

Answer 6

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.

Answer 7

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.

Answer 8

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.

Answer 9

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.

Answer 10

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.

Answer 11

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.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 15

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. 5.6Q Ch. 5 - What must a contract include for the contract to...Ch. 5 - When a contract includes an option to buy...Ch. 5 - Prob. 5.9Q Ch. 5 - Prob. 5.10Q

Solution Summary: The author explains that AC.Com is the legal owner of goods or services which are transferred to the customer for legal consideration, and an agent receives commission for the service rendered.

The amount of revenue recognized at the time of the sales to the customer, and assume AC.Com never takes control on used bicycle.

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.

Want to see the full answer?

Chapter 5 Solutions