Auditing: A Risk Based-Approach (MindTap Course List)
11th Edition
ISBN: 9781337619455
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: Cengage Learning
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Chapter 9, Problem 7CYBK
To determine
Introduction: Revenue Recognition is a generally accepted accounting principle that identifies the specific conditions in which revenue is recognized and determines how to account for it. The objective of FABS’s guidance on revenue recognition is to establish principles to report useful information to users of financial statement.
The criteria that must be met in order for the contract to exist as per the FASB’s guidance on revenue recognition.
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The FASB has established a Five-Step process to recognize revenue. Which of the following is not one of those steps?
A.
Ability to identify the contract with the customer.
B.
Determination thatcollection of the entitled contractual consideration from the customer is probable.
C.
Properly identify all of the performance obligations within the contract.
D.
Ability to determine the transaction price.
E.
Properly identify all of the deliverables and allocate the transaction price to each.
According to Topic 606, in order to have a contract with a customer on which revenue should be recognized, collectability must be:
O a. Remote.
b. Possible.
c. Probable.
Od. Uncertain,
Explain how to Determining Whether a Contract Exists for Revenue Recognition Purposes.
Chapter 9 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
Ch. 9 - In the revenue cycle, the most significant...Ch. 9 - Which of the following statements is true...Ch. 9 - Prob. 4CYBKCh. 9 - Prob. 7CYBKCh. 9 - Prob. 8CYBKCh. 9 - Prob. 9CYBKCh. 9 - Prob. 10CYBKCh. 9 - Prob. 11CYBKCh. 9 - Prob. 12CYBKCh. 9 - Prob. 13CYBK
Ch. 9 - Prob. 14CYBKCh. 9 - Prob. 15CYBKCh. 9 - Prob. 16CYBKCh. 9 - Prob. 17CYBKCh. 9 - Prob. 18CYBKCh. 9 - Which of the following statements is false...Ch. 9 - Prob. 20CYBKCh. 9 - Prob. 22CYBKCh. 9 - Prob. 23CYBKCh. 9 - Prob. 24CYBKCh. 9 - Prob. 25CYBKCh. 9 - Prob. 26CYBKCh. 9 - Prob. 27CYBKCh. 9 - Prob. 28CYBKCh. 9 - Prob. 29CYBKCh. 9 - Prob. 30CYBKCh. 9 - Prob. 31CYBKCh. 9 - Prob. 32CYBKCh. 9 - Refer to Exhibit 9.1. Which accounts are relevant...Ch. 9 - Prob. 2RQSCCh. 9 - Prob. 3RQSCCh. 9 - An important task ¡n the audit of the revenue...Ch. 9 - Prob. 5RQSCCh. 9 - Prob. 6RQSCCh. 9 - Prob. 7RQSCCh. 9 - Prob. 8RQSCCh. 9 - Prob. 9RQSCCh. 9 - Prob. 10RQSCCh. 9 - Prob. 11RQSCCh. 9 - Prob. 12RQSCCh. 9 - Prob. 13RQSCCh. 9 - Prob. 14RQSCCh. 9 - Prob. 15RQSCCh. 9 - Stainless Steel Specialties (SSS) is a...Ch. 9 - Prob. 17RQSCCh. 9 - Prob. 18RQSCCh. 9 - Prob. 19RQSCCh. 9 - Prob. 20RQSCCh. 9 - Prob. 21RQSCCh. 9 - Prob. 22RQSCCh. 9 - Prob. 23RQSCCh. 9 - Prob. 24RQSCCh. 9 - Prob. 25RQSCCh. 9 - Prob. 26RQSCCh. 9 - Prob. 27RQSCCh. 9 - Prob. 28RQSCCh. 9 - Prob. 29RQSCCh. 9 - Prob. 30RQSCCh. 9 - Prob. 31RQSCCh. 9 - Prob. 32RQSCCh. 9 - Prob. 33RQSCCh. 9 - Prob. 34RQSCCh. 9 - Prob. 35RQSCCh. 9 - Prob. 36RQSCCh. 9 - Prob. 37RQSCCh. 9 - Prob. 38RQSCCh. 9 - Prob. 39RQSCCh. 9 - Read the following scenario about Strang...Ch. 9 - Prob. 41RQSCCh. 9 - Prob. 42RQSCCh. 9 - ZYNGA (LO Z 3, 4, 5, 6, 8) Refer to the Why It...Ch. 9 - UTSTARCOM, INC. (LO 2, 3, 4, 5, 6, 8) UTStarcom is...Ch. 9 - Prob. 47FFCh. 9 - Prob. 48FFCh. 9 - Prob. 55DAUA
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Under PFRS 15, what is the measurement basis of revenue from contracts with customers? Select the correct letter: A. Revocable amount of the consideration received or receivable B. Book value of the consideration received or receivable C. Fair value of the consideration received or receivable D. Historical cost of the consideration received or receivablearrow_forwardWhich answer is accurate?arrow_forwardWhich of the following best describes the current revenue recognition principle? Recognize revenue in the accounting period when the performance obligation is satisfied. Recognize revenue in the accounting period when cash is received. Recognize revenue when it is earned. Identify separate performance obligations in the contract.arrow_forward
- (Fundamentals of Revenue Recognition) Respond to the questions related to the following statements.1. A wholly unperformed contract is one in which the company has neither transferred the promised goods or services to the customer nor received, or become entitled to receive, any consideration. Why are these contracts not recorded in the accounts?2. Performance obligations are the unit of account for purposes of applying the revenue recognition standard and therefore determine when and how revenue is recognized. Is this statement correct?3. Elaina Company contracts with a customer and provides the customer with an option to purchase additional goods for free or at a discount. Should Elaina Company account for this option?4. The transaction price is generally not adjusted to reflect the customer’s credit risk, meaning the risk that the customer will not pay the amount to which the entity is entitled to under the contract. Comment on this statement.arrow_forwardWhat must a contract include for the contract to exist for purposes of revenue recognition?arrow_forwardWant Answer. Thank for your helparrow_forward
- Explain the importance of a contract in the revenue recognitionprocess.arrow_forwardThe third step in the process for revenue recognition is to (Enter 1, 2, 3, or 4 that represents the correct answer): determine the separate performance obligations in the contract. allocate transaction price to the separate performance obligations. determine the transaction price. determine the amount of revenue when each performance obligation is satisfied.arrow_forwardWhich of the following statements is true regarding contracts in ASC Topic 606 guidance for revenue recognition? Contracts need to be legally enforceable to be considered under ASC Topic 606. Contracts need to be in written form to be considered under ASC Topic 606. No consideration can be received before a contract exists. No price concessions can be made to an existing contract.arrow_forward
- The following certain attributes present into a contract to determine whether the arrangements with customer are contracts within the scope of IFRS 15:I. The parties have approved the contract and are committed to perform their respective obligations.II. Each party’s rights regarding the goods or services to be transferred can be identified.III. Payment terms can be identified.IV. The contract has commercial substance.V. It is probable that the entity will collect the consideration to which it will be entitled in exchange for goods or services that will be transferred to the customer. I only I, II, and IV only All of the above I, II, IV, and V onlyarrow_forwardFor PFRS 15 to apply, a contract with a customer should meet which of the following conditions? I. The contract has been approved by the parties to the contract. II. Each party's rights in relation to the goods or services to be transferred can be identified. III. The payment terms for the goods or services to be transferred can be identified. IV. The contract has commercial substance. V. It is probable that the consideration to which the entity is entitled to in exchange for the goods or services will be collected. A.I, III, IV and V B.I, II, III and IV C.I, II, III, IV and V D.I. II. III and Varrow_forwardDiscuss and outline the requirements for "revenue recognition principles". What do you think the standard is designed to achieve? In your opinion is there any gap that the standard setter has not fully addressedarrow_forward
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