Describe the guidance of the FASB related to the revenue recognition on contracts.

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Answer 1

Question

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

b.

To determine

Describe the two techniques that management may use to overstate revenue.

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

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Recently, Abercrombie & Fitch has been implementing a turnaround strategy since its sales had been falling for the past few years (11% decrease in 2014, 8% in 2015, and just 3% in 2016.) One part of Abercrombie's new strategy has been to abandon its logo-adorned merchandise, replacing it with a subtler look. Abercrombie wrote down $20.6 million of inventory, including logo-adorned merchandise, during the year ending January 30, 2016. Some of this inventory dated back to late 2013. The write-down was net of the amount it would be able to recover selling the inventory at a discount. The write-down is significant; Abercrombie's reported net income after this write-down was $35.6 million. Interestingly, Abercrombie excluded the inventory write-down from its non-GAAP income measures presented to investors; GAAP earnings were also included in the same report. Question: What impact would the write-down of inventory have had on Abercrombie's assets, Liabilities, and Equity?

Answer 2

Question

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

b.

To determine

Describe the two techniques that management may use to overstate revenue.

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

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Answer 3

Question

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

b.

To determine

Describe the two techniques that management may use to overstate revenue.

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

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Answer 4

Question

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

b.

To determine

Describe the two techniques that management may use to overstate revenue.

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

Expert Solution & Answer

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Answer 5

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

b.

To determine

Describe the two techniques that management may use to overstate revenue.

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

Answer 6

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

Answer 7

Chapter 11, Problem 25QRA

a.

To determine

Describe the guidance of the FASB related to the revenue recognition on contracts.

Answer 8

b.

To determine

Describe the two techniques that management may use to overstate revenue.

Answer 9

b.

To determine

Describe the two techniques that management may use to overstate revenue.

Answer 10

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

Answer 11

c.

To determine

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 11 - Explain the difference between a customers order...Ch. 11 - Prob. 2RQ Ch. 11 - Prob. 3RQ Ch. 11 - State briefly the objective of the billing...Ch. 11 - Prob. 5RQ Ch. 11 - Prob. 6RQ Ch. 11 - Prob. 7RQ Ch. 11 - Prob. 8RQ Ch. 11 - Prob. 9RQ Ch. 11 - Prob. 10RQ

Describe the guidance of the FASB related to the revenue recognition on contracts.

Solution Summary: The author explains the guidance of the Financial Accounting Standard Board related to revenue recognition on contracts.

Concept explainers

Describe the guidance of the FASB related to the revenue recognition on contracts.

Describe the two techniques that management may use to overstate revenue.

Identify the audit procedure that can be employed by the auditors for detecting overstatement of revenue.

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Chapter 11 Solutions