Dinesh Bhai Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, 2024,Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 monthsand receives a fixed payment of $83,000. The contract specifies that Super Rise will receive an additional$41,500 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year.Super Rise estimates variable consideration to be the most likely amount it will receive.Required:1. Assume that Super Rise anticipates it will earn the performance bonus, but is highly uncertain about itsestimate given unfamiliarity with the building and uncertainty about its access to the elevators andrelated equipment. Prepare the journal entry Super Rise would record on January 1.2. Assume the same facts as requirement 1. In addition, assume that, on May 31, Super Rise determinesthat it has sufficient experience with the company to make an accurate estimate of the likelihood that itwill earn the performance bonus, and concludes that it is likely to earn the performance bonus. Preparethe journal entry Super Rise would record on May 31 to recognize May revenue and any necessaryrevision in its estimated bonus receivable.

Service Revenue -Service revenue is the money a business makes from offering its clients and…

Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 mo and receives a fixed payment of $83,000. The contract specifies that Super Rise will receive an additi $41,500 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the Super Rise estimates variable consideration to be the most likely amount it will receive. Required: 1. Assume that Super Rise anticipates it will earn the performance bonus, but is highly uncertain abo estimate given unfamiliarity with the building and uncertainty about its access to the elevators and related equipment. Prepare the journal entry Super Rise would record on January 1.

Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 mo and receives a fixed payment of $83,000. The contract specifies that Super Rise will receive an additi $41,500 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the Super Rise estimates variable consideration to be the most likely amount it will receive. Required: 1. Assume that Super Rise anticipates it will earn the performance bonus, but is highly uncertain abo estimate given unfamiliarity with the building and uncertainty about its access to the elevators and related equipment. Prepare the journal entry Super Rise would record on January 1.

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 13E: On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million....

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, 2024, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $98,000. The contract specifies that Super Rise will receive an additional $49,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. Required: Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1. Assume…
Since 1970, Super Rise, Incorporated, has provided maintenance services for elevators. On January 1, 2024, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $98,000. The contract specifies that Super Rise will receive an additional $49,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the
Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2021, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $84,000. The contract specifies that Super Rise will receive an additional $42,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. Required:1. Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed to access the elevators and related mechanical equipment only between 3 a.m. and 5 a.m. on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes that unexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise would record on January 1.2. Assume instead…
Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2021, Super Rise obtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives a fixed payment of $110,000. The contract specifies that Super Rise will receive an additional $55,000 at the end of the 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive. Required: 1. Assume that Super Rise anticipates it will earn the performance bonus, but is highly uncertain about its estimate given unfamiliarity with the building and uncertainty about its access to the elevators and related equipment. Prepare the journal entry Super Rise would record on January 1. 2. Assume the same facts as requirement 1. In addition assume that, on May 31, Super Rise determines that it has sufficient experience with the company to make an accurate estimate of…
On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 6%. The contract calls for four rent payments of $11,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $92,000 and were expected to have a useful life of five years with no residual value. Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease.
Since 1970, Super Rise, Inc., has provided maintenance services for elevators. On January 1, 2018, Super Riseobtains a contract to maintain an elevator in a 90-story building in New York City for 10 months and receives afixed payment of $80,000. The contract specifies that Super Rise will receive an additional $40,000 at the end ofthe 10 months if there is no unexpected delay, stoppage, or accident during the year. Super Rise estimates variable consideration to be the most likely amount it will receive.Required:1. Assume that, because the building sees a constant flux of people throughout the day, Super Rise is allowed toaccess the elevators and related mechanical equipment only between 3am and 5am on any given day, which is insufficient to perform some of the more time-consuming repair work. As a result, Super Rise believes thatunexpected delays are likely and that it will not earn the bonus. Prepare the journal entry Super Rise wouldrecord on January 1
On January 1, 2024, Nath - Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually.
On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease. Complete this question by entering your answers in the…
ABCompany contracted with XYZ Corporation to construct custom-made equipment. The equipment was completed and ready for use on January 1, 2021. ABCompany paid for the machine by issuing a $200,000, three-year note that bears interest at the rate of 4% , payable annually on December 31 each year. Since the machine was custom-built, the cash price was unknown. However, when compared to similar contracts, 10% was deemed to be a reasonable rate of interest. Required: 1) Prepare the journal entry by ABCompany to record the purchase of equipment. 2) Prepare journal entries to record interest for each of the first two years.
On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two-year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $10,000 each, payable semiannually on June 30 and December 31 each year. • The computers were acquired by ComputerWorld at a cost of $90,000 and were expected to have a useful life of five years with no residual value. . Both firms record amortization and depreciation semiannually. 4 Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, EVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease. Complete this question by entering your answers…
On January 1, 2024, Nath-Langstrom Services, Incorporated, a computer software training firm, leased several computers under a two- year operating lease agreement from ComputerWorld Leasing, which routinely finances equipment for other firms at an annual interest rate of 4%. The contract calls for four rent payments of $20,000 each, payable semiannually on June 30 and December 31 each year. • The computers were acquired by ComputerWorld at a cost of $110,000 and were expected to have a useful life of eight years with no residual value. . Both firms record amortization and depreciation semiannually. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) • Required: 1. Prepare appropriate journal entries recorded by Nath-Langstrom Services for the first year of the lease. 2. Prepare appropriate journal entries recorded by ComputerWorld Leasing for the first year of the lease. Complete this question by entering your…