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1. When using the cost recovery method of accounti...

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1. When using the cost recovery method of accounting for long-term contracts under IFRS, early in the life of the contract it is typically the case that: a. Expenses in excess of revenues are recognized. b. Revenues in excess of expenses are recognized. c. An equal amount of revenue and expense is recognized. d. There is no predictable pattern of revenue and expense. 2. Assume that Steffi signed a $50,000 installment note when she signed the franchise agreement. RS has no experience estimating uncollectible accounts associated with these sorts of notes. They can recognize a. $50,000 of revenue when Steffi signs the agreement. b. $50,000 of revenue as soon as they have assisted Steffi in setting up the store. c. revenue under the installment method, starting when Steffi signs the agreement. d. revenue under the installment method, as soon as they have assisted Steffi in setting up the store. 3. GAAP that covers revenue recognition for multiple-part arrangements requires that a seller recognize revenue for a particular part if: a. the part has value on a stand-alone basis. b. customer acceptance of the part is not contingent on successful delivery of a later part. c. the part constitutes at least a "preponderance of the fair value" of the total arrangement. d. Two of the above (both A and B are required).

 

Paper#7890 | Written in 18-Jul-2015

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