The revenue recognition 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. 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. To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

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Answer 1

Question

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

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Required information Chapter 04 Problem 4-31 LO 4-6, 4-9 [The following information applies to the questions displayed below.] Management fraud (e.g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds (e.g., Enron and World Com) can have a significant effect on shareholders, employees, and other parties. The PCAOB's AS 2401, Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors. Chapter 04 Problem 4-31 Part b LO 4-6, 4-9 b. Select the three conditions that are generally present when fraud occurs: Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Management or other employees have an incentive or are under pressure that provides a reason to commit fraud. Circumstances exist that provide an opportunity for a fraud to be carried…

! Required information Chapter 04 Problem 4-31 LO 4-6, 4-9 [The following information applies to the questions displayed below.] Management fraud (e.g., fraudulent financial reporting) is a relatively rare event. However, when it does occur, the frauds (e.g., Enron and WorldCom) can have a significant effect on shareholders, employees, and other parties. The PCAOB's AS 2401, Consideration of Fraud in a Financial Statement Audit, provides the relevant guidance for auditors. Chapter 04 Problem 4-31 Part c LO 4-6, 4-9 c. Select the items that are most likely to be objectives of the "brainstorming" meeting that is held among the engagement team members: Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. ?Share insights about the entity and its environment and the entity's business risks. ? Provide an opportunity for the team…

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Answer 2

Question

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

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Answer 3

Question

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

Expert Solution & Answer

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Answer 4

Question

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

Expert Solution & Answer

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Answer 5

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

Answer 6

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Answer 7

Chapter 6, Problem 6.10DMP

Requirement – 2

To determine

The revenue recognition

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.

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.

To indicate: The revenue recognition note in Company E’s and Company P’s financial statement.

Answer 8

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

Answer 9

Requirement – 3

To determine

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

Answer 10

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Answer 11

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Answer 12

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Answer 13

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. 6.6Q Ch. 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

Solution Summary: The author explains the revenue recognition principle in Company E and Company P's financial statement. Principal is the legal owner of goods or service which is transferred to the customer for legal consideration.

Concept explainers

To indicate: Whether the amount shown in the income statement is “net” or “gross”.

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Chapter 6 Solutions