Chapter 8, Problem 8.11DMP

Review the new revenue recognition guidance issued by the Financial Accounting Standards Board http://www.fasb.org/jsp/FASB/Page/ImageBridgePagecid=1176169257359 and answer the following questions. What is the new standard as of ASC 606? What does that mean to you? What are the recommended steps companies should follow to achieve the core principle? How does this change current GAAP standards? Who is required to adhere to this new standard?

Briefly describe the guidelines provided by GAAP for the recognition of revenue by a franchisor for an initialfranchise fee

Which of the following statements best explains the relationship between the acquisition/payment process and the sales/collection process? Group of answer choices   A. The same transaction can be considered part of both processes.   B. All organizations that have a sales/collection process also have an inventory acquisition/payment process.   C. Both the same transaction can be considered part of both processes and all organizations that have a sales/collection process also have an inventory acquisition/payment process.   D. Neither the same transaction can be considered part of both processes nor all organizations that have a sales/collection process also have an inventory acquisition/payment process.

Discuss generally how product and period costs should be recognized at interim dates. Also discuss how inventory and cost of goods sold may be afforded special accounting treatment at interim dates.

Write an analysis of the five revenue-recognition steps.  Apply the five revenue-recognition steps per ASC Topic 606 or FASB Accounting Standards Update (ASU) No. 2014-09 to Stella’s sales transaction on the next page.  Before applying each step, describe the requirements of that step, and quote relevant ASC 606 sub-topics using Revenue Recognition-Brief-Roadmap-by-AICPA.pdf.  Provide an explanation/justification for how you apply the requirement by referring to the relevant guideline in the standard.    Tip for Step 2: You will identify the number of performance obligations in the contract and describe what they are along with why they are separate performance obligations. Step 2 is related to Steps 4 & 5.  So make sure that your answers in Steps 4 and 5 are consistent with each other and with the answer in Step 2.   Tip for Step 4: Show the computation of the transaction price of each performance obligation.  Be sure to consider the discount.   Tip for Step 5: Specify (1) how…

Changing the method of inventory valuation should be reported in the financial statements under what enhancing quality of accounting information?A. TimelinessB. VerifiabilityC. ComparabilityD. Understandability

Explanation on the disclosure requirements for the accounting treatment of the MFRS 138. Clear explanation, with examples, covering  on recognition, measurement and disclosure requirements for the accounting treatment

Solve

Discuss the primary difference between U.S. GAAP and IFRS with respect to determining the cost of inventory.