Is earnings management always intended to produce higher income? Explain Explain and justify why revenue often is recognized as earned at point of delivery. Explain in what situations it would be useful to recognize revenue as the productive activity takes place. At what times, other than those included in the above ans
Case 3-6 Revenue recognition You are controller for an architectural firm whose accounting year ends on December 31. As part of the management team, you receive a year-end bonus directly related to the firm's earnings for the year. One of your duties is to review the transactions recorded by the bookkeeper. A new bookkeeper
The following information is available for Davis Company regarding sales of Blobs and Globs. Budget Blobs/unit Total Blobs Globs/unit Total Globs Total 500 Units budgeted budgeted (100 units)
For each of the following situations, indicate whether the organization should recognize the described services as revenue (offset by corresponding expenses). Briefly justify your response or identify key issues. 1 Nellie Wilson, the noted country-western singer performs a benefit concert for the Save-Our-Farms Associati
The following situation is in chronological order. 1. Flutie decides to buy a surfboard. 2. He calls Surfing USA Co. to inquire about their surfboards. 3. Two days later he requests Surfing USA Co. to make him a surfboard. 4. Three days later, Surfing USA Co. sends him a purchase order to fill out. 5. He sends back t
There are eight concepts that provide the theoretical support to accounting. Indicate why revenue recognition is important among these and what it dictates.
A company has provided the following data: Sales 3,000 units Sales price $70 per unit Variable cost $50 per unit Fixed cost $25,000 If the sales volume decreases by 25%, the variable cost per unit increases by 15%, and all other factors remain the same, net income will: A) decrease by $31,875. B) decrea
1, The manufacturing cost of Lancer Industries for three months of the year are provided below: Total Cost Production April $ 61,900 1,200 Units May 80,920 1,800 June 100,300 2,400 Using the high-low method, the variable cost per unit, and the total fixed costs are: 2, Please use the following for
Softronics is a new company who has developed and is about to sell a new software product. The software is designed to be installed, configured and implemented by the customer. The software package is not a consumer item but is expected to be purchased by a variety of businesses. Software is delivered via the customer downloadin
Adjusting entries seems to be a very important step in the accounting world. One of the adjustments that is made is associated with accrued revenue. The accrued revenue comes will normally arise when you perform work and you have not yet recorded the transaction in your accounts. The book does describe this situation. Bu
The Health Club sells lifetime memberships for $5,000 each. These memberships entitle a person to unlimited access to the club's weight room, exercise equipment, swimming pool, and sauna. Once a lifetime membership fee is paid, it is not refundable for any reason. According to the provisions of SAB 101, revenue from the
Describe the three important guidelines for revenue recognition.
For the Gina Const. I keep coming up with 9,500,000 revenue to be recognized but the check figures in my text says it should be 9,750,000. Simona Amanar Industries has two operating divisions-Gina Construction Division and Chorkina Securities Division. Each division maintains its own accounting system and method of revenue r
See problem attached attached. P18-28B (45-60 min) Req. 1 Blue Red Green Yellow Sales revenue $705,000 $616,000 Variable costs 152,100 295,680 164,320 Fixed costs 122,000 136,000 Operating income (loss) $12,900 $35,680 Units sold 190,000 10,000 Contribution margin
Minnie, the manager of the marketing department for one of the industry's leading retail businesses, has been notified by the accounting department that her department experienced an unfavorable sales volume variance in the preceding period but a favorable sales price variance. Based on these contradictory results, how would yo
14. A company bought an inventory item 4 times during the year and purchased 10 units each time. The per-unit prices paid as are as follows: purchase 1............$9 purchase 2............$10 purchase 3............$12 purchase 4.............$13 Beginning inventory was 20 units with a per unit cost of $. Ending inventor
Halibut Corp. ("HC") is a large multinational engineering and construction firm. One of its major activities is to construct large-scale infrastructure projects such as bridges, highways, dams and desalinization plants. HC is currently starting the construction of a large desalinization plant in Qatar. Details regarding the
Snuggle-Up is a "wearable" blanket with sleeves that has been sold directly to final customers through television advertising. It is now going to be distributed through mass merchandisers. The expected retail price will be $14.95, with an average 10% margin to distributors. Variable costs are $6.73 each. The manufacturer is
Case Study Assignment: Pick any revenue recognition standard on the FASB Codification site and prepare a response in which you discuss what this standard is, why it is important and how it has helped to shape the accounting environment. http://asc.fasb.org/home Accounting Bulletin 101 (SAB 101) was selected.
My terracotta business (which adopted the accrual method), sold $100K worth of pots. I received cash up front of $20K, and accounts receivable is $80K. How much is my revenue? If I said I made $50K from my terracotta business in the past 3 months. and you wanted to check whether I am telling you the truth, which Financial
Revenue on an accrual-accounting basis must be both earned and realized (or realizable) before accountants recognize it in the income statement. Companies recognize revenue in cash-basis accounting only when they have received the cash. Is an accrual-basis or cash-basis recognition of revenue more relevant for evaluating the per
1: What was the overall impact of both the software capitalization policy and the revenue recognition policy on Microsoft's fiscal 1997, 1998, and 1999 financial statements? 2: In your opinion, during the same timeframe, did Microsoft provide its analysts' with information that was intentionally overly pessimistic? Are the
When does a not-for-profit organization recognize pledge revenue and contribution revenue?
Revenue Recognition for Bike Company at time of shipment,collection & production.
1. The principal DISADVANTAGE of using the percentage-of-completion method of recognizing revenue from long-term contracts is that it (Points: 7) is unacceptable for income tax purposes. gives results based upon estimates which may be subject to considerable uncertainty. is likely to assign a small a
DeLong Inc. has fixed operating costs of $470,000, variable costs of $2.80 per unit produced, and its products sell for $4.00 per unit. What is the company's breakeven point, i.e., at what unit sales volume would income equal costs?
See attached problem 1. Identify point of revenue recognition. The following independent situations require professional judgment for determining when to recognize revenue from the transactions. Southwest Airlines sells you an advance-purchase airline ticket in September for your flight home at Christmas. Ultimate E
Dear Brainmass, I am having some difficulty with this problem. I would really appreciate the assistance when you get the chance. Thank you so much in advance for taking the time to review my post. On February 1, 2006 Toms River Construction Company obtained a contract to build a baseball stadium in Lakewood for $3,300,00
5. (Sales Variances) William Wong manages the marketing department at Festive Figurines Limited. He is evaluated based on his ability to meet budgeted revenues. For May 2008, his revenue budget was as follows: Price Per Unit Unit Sales Daniel Boone
#1 Break-even point) You are a hard-working analyst in the office of financial operations for a manufacturing firm that produces a single product. You have developed the following cost structure information for this company. All of it pertains to an output level of 10 million units. Using this information, find the break-even