Sanieev enters into a contract offering variable consideration. The contract pays him $2,500/month for six months of continuous-consulting services, In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time Assume Sanjeev estimates variable consideration as the most likely amount. What is the amount of revenue Sanjeev would recognize for the first month of the contract? Multiple Choice O $2,500 $3,500

Sanieev enters into a contract offering variable consideration. The contract pays him $2,500/month for six months of continuous-consulting services, In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time Assume Sanjeev estimates variable consideration as the most likely amount. What is the amount of revenue Sanjeev would recognize for the first month of the contract? Multiple Choice O $2,500 $3,500

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...

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Sanjeev enters into a contract offering variable consideration. The contract pays him $2, 200/month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time. Assume Sanjeev estimates variable consideration as the expected value. What is the amount of revenue Sanjeev would recognize for the first month of the contract? Note: Do not round intermediate calculations. Round final answer to whole dollars. Multiple Choice $2, 600 $2, 200 $15,600 $1, 200
Sanjeev enters into a contract offering variable consideration. The contract pays him $1,000/month for six months of continuous consulting services. In addition, there is a 60% chance the contract will pay an additional $2,000 and a 40% chance the contract will pay an additional $3,000, depending on the outcome of the consulting contract. Sanjeev concludes that this contract qualifies for revenue recognition over time. Assume that Sanjeev estimates variable consideration as the most likely amount. After Sanjeev has recognized revenue for two months of the contract, he changes his assessment of the chance the contract will pay him $3,000 to 70%. What adjustment to revenue should Sanjeev recognize to account for that change in estimate? A) Debit of $1,000 B) Debit of $334 C) Credit of $1,000 D) Credit of $334
Company XYZ has hired you as a consultant. It has suggested two options to pay for your services: Option A: An initial payment of 100,000AED on signing the contract, 200,000AED end of the second year and 100,000 at end of the third year. Option B: An initial payment of 100,000AED on signing the contract, 150,000AED end of the first year, and 140, 000AED end of the second year. Which payment plan should you accept if the market interest rate is 10%? Briefly explain your choice.
Zentric Garage Inc. enters into a contract to provide services totaling $78,000. The contract includes a potential performance bonus based on when Zentric Garage completes the services. Zentric Garage estimates the following scenarios for completion. (Click the icon to view the scenarios.) Determine the bonus using the most-likely-amount approach. Determine the bonus using the most-likely-amount approach under scenario 1. The bonus for this contract using the most-likely-amount approach under scenario 1 is $ Determine the bonus using the most-likely-amount approach under scenario 2. The bonus for this contract using the most-likely-amount approach under scenario 2 is $ Determine the bonus using the most-likely-amount approach under scenario 3. The bonus for this contract using the most-likely-amount approach under scenario 3 is $ Ente Scenarios Complete within 3 days 5 days 8 days Probability Bonus Scenario 1 Scenario 2 80% 47% 15% 38% 5% 15% $ 13,000 $ 8,000 $ 3,500 Print Done…
Solve in Excel. Under contract, Rug Doctor will provide Value Markets with equipment and supplies on 1/2/2013. The equipment has a $655,000 fair market value; the supplies has a value of $110,000. Value Markets agrees to pay Rug Doctor $100,000 every three months over two years, 4/2/2013 to 10/2/2015. The rate to discount the cash flows is 8%. Calculate the total contract price (for revenue recognition).
John William, president of Crane Always, agrees to construct a concrete cart path at Windsor Golf Club. Crane Always enters into a contract with Windsor to construct the path for $212,000. In addition, as part of the contract, a performance bonus of $46,800 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed-upon date. The performance bonus decreases by $11,700 per week for every week beyond the agreed-upon completion date. John has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. John estimates, given the constraints of his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 20% probability that he will be 2 weeks late. Determine the transaction price that Crane…
Shoreline sells a piece of equipment to a corporate customer for $500,000. The cost of the equipment to Shoreline is $375,000. The terms of the sale call for the customer to make equal annual payments over the next three years, with the first payment due 1 year from now. APR is 9%. Variable consideration is already taken into account. Use the following tables to help you amortize and determine revenue and interest on the contract. Under the Installment method, how much gross profit will Shoreline recognize in Year 1? (to the nearest dollar) $0 $45,000 O $38,131 $97,774
Lemon Ltd. offers executive training seminars using, in part, recorded lectures of a well-known speaker. The agreement calls for Lemon to pay a royalty for the use of the lectures. The lecturer's agent offers Lemon two options. The first option is revenue-based and Lemon agrees to pay 25 percent of its revenues to the speaker. The second option is a flat rate of $390,000 annually for the use of the lectures in these seminars. The royalty agreement will run one year and the royalty option chosen cannot be changed during the agreement. All other royalty terms are the same. Lemon charges $1,600 for the seminar and the variable costs for the seminar (excluding any royalty) is $300. Annual fixed costs (excluding any royalties) are $585,000. Required: a. What is the annual break-even level assuming: 1. The revenue-based royalty agreement? 2. The flat-rate royalty agreement? b. At what annual volume would the operating profit be the same regardless of the royalty option chosen? c.…
Joseph Taylor, president of Carla Vista Always, agrees to construct a concrete cart path at Vaughn Golf Club. Carla Vista Always enters into a contract with Vaughn to construct the path for $202, 000. In addition, as part of the contract, a performance bonus of $46, 400 will be paid based on the timing of completion. The performance bonus will be paid fully if completed by the agreed - upon date. The performance bonus decreases by $11,600 per week for every week beyond the agreed - upon completion date. Joseph has been involved in a number of contracts that had performance bonuses as part of the agreement in the past. As a result, he is fairly confident that he will receive a good portion of the performance bonus. Joseph estimates, given the constraints of his schedule related to other jobs, that there is 50% probability that he will complete the project on time, a 30% probability that he will be 1 week late, and a 20% probability that he will be 2 weeks late. Assume that Joseph Taylor…
George Co. enters into a contract to build an apartment for Jungle Co. For a fixed fee of P20,000,000. At contract inception, George Co. assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. George Co. determines that the measure of progress that best depicts its performance in the contract is input method based on costs incurred. George estimates that the total contract costs would amount to P16,000.000 over the construction period. George incurs contract costs of P2,000,000 during the year. How much revenue is recognized for the year?
Suraya wants to Buy a building. He went to apply financing with standard chartered. After proper assessment, standard chartered bank provides a financing facility under Murabahah to the Purchase Orderer principle. Financing amount: RM800,000 Rate of return: 8.2% Financing tenure: 10 years At the end of the contract, Suraya still has an outstanding amount of RM40,000. As part of condition of the Murabahah contract, Suraya will be charged an annual penalty fee of 4% for any outstanding amount due and the amount will be donated to charitable organisation. Question: (a) Record journal entries to record all of the above transactions in standard chartered bank's books (Please show your workings/calculations).
Ms. Demeanor had a new POS (point-of-sale) installed in her office. The balance owing on the contract is $23,500 which includes equipment and installation fees. The contract permits individual payments on the account whenever possible, but the final balance must be paid two years (24 months) from now. Starting today, interest will accumulate on the balance at 3.25% compounded monthly. Ms. Demeanor will make a payment of $5200 6 months from now and $6300 20 months from now. What is the final balance owing on the account in two years (24 months from now)? Practice drawing a timeline in your own notes.