WILEY CH 18
Portugal, Inc. has the following amounts related to its activities for the year ended December 31, 2015: Sales to customers $6,250,000G ain on sale of equipment $ 450,000 Gain on sale of investments $ 950,000 Loss on sale of land $ 300,000 Portugal, Inc. uses IFRS for its external financial reporting. How much revenue should Portugal, Inc. report on its income statement for the year ended December 31, 2015? $7,650,000 $7,350,000 $6,250,000 $7,200,000
$7,650,000
Hopkins Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income$1,500,000Estimated litigation expense2,000,000Extra depreciation for taxes(3,000,000)Taxable income$ 500,000 The estimated litigation expense of $2,000,000 will be deductible in 2015 when it is expected to be paid. Use of the depreciable assets will result in taxable amounts of $1,000,000 in each of the next three years. The income tax rate is 30% for all years.The deferred tax asset to be recognized is $600,000 current. $300,000 current. $450,000 current. $150,000 current.
($2,000,000 × 30%) = $600,000.
CH 20
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CHAPTER 18
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Ichabod Co. began operations on July 1, 2015 and appropriately uses the installment method of accounting. The following information pertains to Ichabod's operations for 2015: Installment sales 720,000 Cost of installment sales 432,000 General and administrative expenses 72,000 Collections on installment sales 330,000 The balance in the deferred gross profit account at December 31, 2015 should be $90,000. $288,000. $115,200. $156,000.
$156,000. $720,000 - $432,000 = $288,000 (40% gross profit rate); $288,000 - ($330,000 × 40%) = $156,000.
Horner Corporation has a deferred tax asset at December 31, 2015 of $160,000 due to the recognition of potential tax benefits of an operating loss carryforward. The enacted tax rates are as follows: 40% for 2012-2014; 35% for 2015; and 30% for 2016 and thereafter. Assuming that management expects that only 50% of the related benefits will actually be realized, a valuation account should be established in the amount of: $32,000 $80,000 $28,000 $24,000
$160,000 × .50 = $80,000.
On January 1, 2014, Makoto Co. has the following balances: Projected benefit obligation $2,730,000 Fair value of plan assets 2,340,000 The settlement rate is 10%. Other data related to the pension plan for 2014 are: Service cost $234,000 Amortization of unrecognized prior service costs 77,600 Contributions 390,400 Benefits paid 140,500 Actual return on plan assets 304,500 Amortization of unrecognized net gain 27, 800 The balance of the projected benefit obligation at December 31, 2014 is $3,061,500. $3,038,100. $3,490,500. $3,096,500.
$2,730,000 + $234,000 + ($2,730,000 * 10%) - $140,500 results in $3,096,500
Parker Corporation prepared the following reconciliation for 2014, its first year of operations: Pretax financial income for 2014$ 2,060,000 Tax exempt interest(350,000) Originating temporary difference(690,000) Taxable income$ 1,020,000 The temporary difference will reverse evenly over the next two years at an enacted tax rate of 35%. The enacted tax rate for 2014 is 30%. What amount should Grey report in its 2014 income statement as the deferred portion of the provision for income taxes? $241,500 debit $207,000 credit $119,000 debit $122,500 credit
$241,500 debit
White Inc. reports a taxable and financial loss of $650,000 for 2013. Its pretax financial income for the last two years was as follows: 2011$300,0002012400,000 The amount that White Inc. reports as a net loss for financial reporting purposes in 2013, assuming that it uses the carryback provisions, and that the tax rate is 30% for all periods affected, is $455,000 loss. $650,000 loss. $195,000 loss. $ -0-.
$455,000 loss. $650,000 loss less the tax benefit of $195,000 ([$300,000 * 30%] plus [$350,000 * 30%]) results in a net loss of $455,000.
Jerome Co. has the following deferred tax liabilities at December 31, 2014: Amount Related to $100,000 Installment sales, expected to be collected in 2015 $350,000 Fixed asset, 10-year remaining useful life, 2014 tax depreciation exceeds book depreciation $90,000 Prepaid insurance related to 2015 What amount would Jerome Co. report as a noncurrent deferred tax liability under IFRS and under U.S. GAAP? IFRSU.S. GAAP $350,000$350,000 $540,000$350,000 $540,000$540,000 $0$450,000
$540,000$350,000
Hawkins Inc. had pre-tax accounting income of $1,800,000 and a tax rate of 35% in 2013, its first year of operations. During 2013 the company had the following transactions: Received rent from Barrett Co. for 2014 $64,000 Municipal bond income $80,000 Depreciation for tax purposes in excess of book depreciation $40,000 Installment sales revenue to be collected in 2014 $108,000 For 2013, what is the amount of income taxes payable for Hawkins Inc.? $603,400 $572,600 $628,600 $648,200
$572,600 $1,800,000 + $64,000 - $80,000 - $40,000 - $108,000 = $1,636,000 $1,636,000 × .35 = $572,600.
Mathis Co. at the end of 2014, its first year of operations, prepared a reconciliation between pretax financial income and taxable income as follows: Pretax financial income$ 800,000 Estimated litigation expense 2,000,000 Installment sales(1,600,000) Taxable income$ 1,200,000 The estimated litigation expense of $2,000,000 will be deductible in 2016 when it is expected to be paid. The gross profit from the installment sales will be realized in the amount of $800,000 in each of the next two years. The estimated liability for litigation is classified as noncurrent and the installment accounts receivable are classified as $800,000 current and $800,000 noncurrent. The income tax rate is 30% for all years.The deferred tax asset to be recognized is $600,000 noncurrent. $0. $120,000 current. $600,000 current.
$600,000 noncurrent.
Belgium Co. is constructing a tunnel for $600 million. Construction began in 2013 and is estimated to be completed in 2018. At December 31, 2015, Belgium has incurred costs totaling $267 million with $64 million of that incurred in 2015, $107 million in 2014, and the remainder during 2013. Belgium believes that it completed 30% of the tunnel during 2015, although that may change based on future activity. Belgium Co. uses IFRS for its accounting and regards its cost numbers as very uncertain. What amount of revenue should Belgium Co. recognize for the year ended December 31, 2016? No revenue should be recognized until the contract is completed in 2018 $180 million $64 million $267 million
$64 million
Portugal, Inc. has the following amounts related to its activities for the year ended December 31, 2015: Sales to customers $6,250,000 Gain on sale of equipment $ 450,000 Gain on sale of investments $ 950,000 Loss on sale of land $ 300,000 Portugal, Inc. uses IFRS for its external financial reporting. How much revenue should Portugal, Inc. report on its income statement for the year ended December 31, 2015? $7,650,000 $7,350,000 $6,250,000 $7,200,000
$7,650,000
Which of the following is false regarding accounting for deferred taxes under IFRS? The rate used to compute deferred taxes is either the enacted tax rate, or a substantially enacted tax rate (virtually certain). A deferred tax asset is recognized up to the amount that is probable to be realized. Tax effects of certain items are recognized in equity. A deferred tax liability is classified as current or noncurrent based on the classification of the asset or liability to which it relates
A deferred tax liability is classified as current or noncurrent based on the classification of the asset or liability to which it relates
Gains or losses can represent changes in APBO or the book value of pension plan assets. EPBO or the fair value of pension plan assets. EPBO or the book value of pension plan assets. APBO or the fair value of pension plan assets
APBO or the fair value of pension plan assets
With regard to recognition of deferred tax assets, IFRS requires Approach Recognition Impairment approach Recognize asset in full, reduced by valuation allowance if it's more likely than not that all or a portion of the asset won't be realized Affirmative judgment Recognize asset in full, reduced by valuation allowance if it's more likely than not that all or a portion of the asset won't be realized Affirmative judgment Recognize an asset up to the amount that is probable to be realized Impairment approach Recognize an asset up to the amount that is probable to be realized
Affirmative judgment Recognize an asset up to the amount that is probable to be realized
Under the completion-of-production basis, revenue is recognized if: All of the answers are correct. the units produced are interchangeable. the sales price is reasonably assured. no significant costs are involved in distributing the product.
All of the answers are correct.
Which one of the following is not a component of pension expense? Gain or loss. Actual return on plan assets. Amortization of projected benefit obligation. Amortization of prior service cost.
Amortization of projected benefit obligation.
T/F a company should not recognize the retroactive benefits as pension expense in the year of amendment.
FALSE
Both IFRS and U.S. GAAP have separate standards for pensions and other postretirement obligations. True False
False
Both IFRS and U.S. GAAP provide separate definitions for revenues and gains. True False
False
Employers are at risk with defined-contribution plans because they must contribute enough to meet the cost of benefits that the plan defines. True False
False
IFRS on income taxes is based on the different principles than U.S. GAAP. True False
False
Prior service costs due to a pension plan amendment are expensed in the year the amendment occurred. True False
False
The expected postretirement benefit obligation is reported in the notes to the financial statements. True False
False
Unlike pension accounting, the gains and losses from changes in the APBO or the value of plan assets are not subject to amortization using the corridor approach. True False
False
Uncertain tax positions Uncertain tax positions I. Are positions for which the tax authorities may disallow a deduction in whole or in part. II. Include instances in which the tax law is clear and in which the company believes an audit is likely. III. Give rise to tax expense by increasing payables or increasing a deferred tax liability. I, II, and III. I and III only. II only. I only.
I only. I. Are positions for which the tax authorities may disallow a deduction in whole or in part.
The joint project of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) related to revenue recognition includes Evaluating a "customer-consideration" model. Eliminating inconsistencies in the existing conceptual guidance. Establishing a single, comprehensive standard. II and III only. Neither I, II, nor III are currently included in the joint project of the FASB and IASB. I and II only. I, II, and III.
I, II, and III.
Match the approach, IFRS or U.S. GAAP, with the location where tax effects are reported: Approach Location IFRS Charge or credit only taxable temporary differences to income U.S. GAAP Charge or credit certain tax effects to equity IFRS Charge or credit certain tax effects to equity U.S. GAAP Charge or credit only deductible temporary differences to income
IFRS Charge or credit certain tax effects to equity
All of the following statements regarding the accounting for various forms of compensation plans under IFRS are true except: IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans. IFRS does not recognize prior service costs on the balance sheet. For defined benefit plans, IFRS companies do not "recycle" actuarial gains and losses into income. In order to dampen and in some cases fully eliminate the fluctuations in pension expenses, IFRS uses smoothing provisions
IFRS does not separate pension plans into defined-contribution plans and defined-benefit plans.
With respect to IFRS and revenue recognition, all the following statements are true except: IFRS does not permit the completed-contract method of accounting for long-term construction contracts. under IFRS, if revenues and costs are difficult to estimate, then companies recognize revenue only to the extent of the cost incurred—a zero-profit approach. in long-term construction contracts, IFRS requires recognition of a loss immediately if the overall contract is going to be unprofitable. IFRS has more-detailed revenue recognition rules compared to U.S. GAAP.
IFRS has more-detailed revenue recognition rules compared to U.S. GAAP.
Assuming a 40% statutory tax rate applies to all years involved, which of the following situations will give rise to reporting a deferred tax liability on the balance sheet I. A revenue is deferred for financial reporting purposes but not for tax purposes. II. A revenue is deferred for tax purposes but not for financial reporting purposes. III. An expense is deferred for financial reporting purposes but not for tax purposes. IV. An expense is deferred for tax purposes but not for financial reporting purposes. items I and II only. items I and IV only. items II and III only. item II only.
II. A revenue is deferred for tax purposes but not for financial reporting purposes. III. An expense is deferred for financial reporting purposes but not for tax purposes. items II and III only.
Under the percentage-of-completion method, how should the balances of progress billings and construction in process be shown at reporting dates prior to the completion of a long-term contract? Progress billings as income, construction in process as inventory. Net, as income from construction if credit balance, and loss from construction if debit balance. Net, as a current asset if a debit balance, and as a current liability if a credit balance. Progress billings as deferred income, construction in progress as a deferred expense.
Net, as a current asset if a debit balance, and as a current liability if a credit balance.
Which of the following are temporary differences that are normally classified as expenses or losses that are deductible after they are recognized in financial income? Fines and expenses resulting from a violation of law. Product warranty liabilities. Depreciable property. Prepaid expenses that are deducted on the tax return in the period paid.
Product warranty liabilities.
Franchisors generally report continuing franchise fees as revenue when they are earned and receivable. True False
T
Which of the following disclosures of postretirement benefits would not be required by professional pronouncements? A schedule showing changes in postretirement benefits and plan assets during the year The amount of the EPBO The assumptions and rates used in computing the EPBO and APBO Postretirement expense for the period
The amount of the EPBO
Companies commonly recognize revenues from manufacturing and selling activities at point of sale (usually meaning delivery). True False
True
Companies must disclose a reconciliation of how the projected benefit obligation and the fair value of plan assets changed during the year either in their financial statements or in the notes. True False
True
General revenue recognition principles are provided by IFRS contain limited detailed or industry specific guidance. True False
True
In a consignment sale, the consignor recognizes revenue when it receives cash and notification of the sale from the consignee. True False
True
The Accumulated Other Comprehensive Income (G/L) account is amortized only if it exceeds 10 percent of the larger of the beginning balances of the projected benefit obligation or the market-related plan assets value. True False
True
The discount rate used for measuring the present value of the postretirement benefit obligation and the service cost component is the same as that applied to the pension measurements. True False
True
Under the deposit method, no revenue is recognized until the sale is complete. True False
True
Unlike IFRS, U.S. GAAP does not permit the choice of recognizing actuarial gains and losses in income immediately or amortizing them over the expected remaining work lives of employees. True False
True
When there is a significant increase in the estimated total contract costs but the increase does not eliminate all profit on the contract, which of the following is correct? Under both the percentage-of-completion and the completed-contract methods, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. Under the completed-contract method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods. No current period adjustment is required
Under the percentage-of-completion method only, the estimated cost increase requires a current period adjustment of excess gross profit recognized on the project in prior periods.
Reedy Builders, Inc. is using the completed-contract method for a $12,500,000 contract that will take three years to complete. Data at December 31, 2015, the end of the first year, are as follows: Costs incurred to date$6,240,000Estimated costs to complete6,660,000Billings to date5,920,000Collections to date5,540,000 The gross profit or loss that should be recognized for 2015 is a $320,000 loss. $0. a $400,000 loss. a $133,334 loss.
a $400,000 loss.
Triad Builders, Inc. is using the completed-contract method for a $14,700,000 contract that will take two years to complete. Data at December 31, 2015, the end of the first year, are as follows: Costs incurred to date$7,520,000Estimated costs to complete$8,060,000Billings to date 6,440,000Collections to date 5,980,000 The gross profit or loss that should be recognized for 2015 is a $880,000 loss. $0. a $1,080,000 loss. a $1,540,000 loss.
a $880,000 loss.
Deferred gross profit on installment sales is generally reported as a current liability. a deduction from gross profit. a contra asset account. a contra revenue account.
a current liability.
The main purpose of the Pension Benefit Guaranty Corporation is to require minimum funding of pensions. require plan administrators to publish a comprehensive description and summary of their plans. administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities. all of the answers are correct.
administer terminated plans and to impose liens on the employer's assets for certain unfunded pension liabilities.
All of the following pension information should be disclosed in the notes to the financial statements except: the expected benefit payments to be paid to current plan participants for each of the next five fiscal years. a company's best estimate of expected contributions to be paid to the plan during the next year. a reconciliation showing how the projected benefit obligation and the fair value of the plan assets changed from the beginning to the end of the period. all of the answers are correct.
all of the answers are correct.
When accounting for income taxes, the differences between IFRS and U.S. GAAP involve: all of these answer choices are correct. some minor differences in the recognition, measurement, and disclosure criteria. differences in implementation guidance. a few exceptions to the asset-liability approach.
all of these answer choices are correct.
One component of pension expense is actual return on plan assets. Plan assets include none of these answers are correct. assets that a company holds to earn a reasonable return, generally at minimum risk. plan assets still under the control of the company. only assets reported on the balance sheet of the employer as prepaid pension cost.
assets that a company holds to earn a reasonable return, generally at minimum risk.
Revenue from selling assets other than inventory is generally recognized: at the date of sale. as cash is collected. at the completion of production. after costs are recovered.
at the date of sale.
When a seller is exposed to continued risks of ownership through return of the product, the seller should recognize revenue: at the time of sale only if 6 specific conditions are met. at the time of sale and account for returns as they occur. immediately, but reduce revenue by an estimate of future returns. when all return privileges have expired.
at the time of sale only if 6 specific conditions are met.
The unrecognized net gain or loss balance must be amortized when it exceeds 10% of the larger of the: ending accumulated benefit obligation or beginning market-related asset value. beginning projected benefit obligation or beginning market-related asset value. ending projected benefit obligation or beginning market related asset value. beginning accumulated benefit obligation or beginning market-related asset value.
beginning projected benefit obligation or beginning market-related asset value.
A loss on an unprofitable long-term contract is recognized in the current period under: the completed-contract method only. the percentage-of-completion method only. both the completed-contract and the percentage-of-completion methods. neither the completed-contract nor the percentage-of-completion methods.
both the completed-contract and the percentage-of-completion methods.
A very popular measure used to determine the progress toward completion under the percentage-of-completion method is the: cost-to-cost method. efforts expended method. output method. units of work performed method.
cost-to-cost method.
On December 31, 2013, Winston Inc. has determined that it is more likely than not that $240,000 of a $600,000 deferred tax asset will not be realized. The journal entry to record this reduction in asset value will include a credit to Allowance to Reduce Deferred Tax Asset to Expected Realizable Value of $240,000. debit to Income Tax Expense for $360,000. debit to Income Tax Payable of $240,000. credit to Income Tax Expense for $360,000.
credit to Allowance to Reduce Deferred Tax Asset to Expected Realizable Value of $240,000.
A deferred income tax asset or liability is usually classified as a current asset. noncurrent asset or liability. current or noncurrent according to the expected reversal date of the temporary difference. current or noncurrent based on the classification of the related asset (liability) for financial reporting purposes.
current or noncurrent based on the classification of the related asset (liability) for financial reporting purposes.
Taxable income of a corporation is reported on the corporation's income statement. differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination. differs from accounting income due to differences in intraperiod allocation between the two methods of income determination. is based on generally accepted accounting principles.
differs from accounting income due to differences in interperiod allocation and permanent differences between the two methods of income determination.
The Billings on Construction in Process account is reported as: a current liability only. either a current asset or current liability. revenue on the income statement. a current asset only.
either a current asset or current liability.
The Billings on Construction in Process account is reported as: revenue on the income statement. a current asset only. a current liability only. either a current asset or current liability.
either a current asset or current liability.
A postretirement asset is computed as the excess of the fair value of plan assets over the accumulated postretirement benefit obligation. accumulated postretirement benefit obligation over the fair value of plan assets, but not vice versa. expected postretirement benefit obligation over the fair value of plan assets. accumulated postretirement benefit obligation over the fair value of plan assets.
fair value of plan assets over the accumulated postretirement benefit obligation.
All of the following are possible sources of taxable income available to realize a tax benefit for deductible temporary differences except: tax planning strategies that would accelerate taxable amounts to utilize expiring carryforwards. taxable income in prior carryback years if carryback is permitted. future reversals of existing deductible temporary differences. future taxable income exclusive of reversing temporary differences.
future reversals of existing deductible temporary differences.
The deferred tax expense is the decrease in balance of deferred tax asset minus the increase in balance of deferred tax liability. increase in balance of deferred tax asset minus the increase in balance of deferred tax liability. increase in balance of deferred tax liability minus the increase in balance of deferred tax asset. increase in balance of deferred tax asset plus the increase in balance of deferred tax liability
increase in balance of deferred tax liability minus the increase in balance of deferred tax asset.
All of the following are examples of temporary differences that result in taxable amounts in future years except: investments accounted for under the equity method. long-term construction contracts. subscriptions received in advance. installment sales.
investments accounted for under the equity method.
With regard to uncertain tax positions, the FASB requires that companies recognize a tax benefit when it is probable and can be reasonably estimated. there is at least a 51% probability that the uncertain tax position will be approved by the taxing authorities. it is more likely than not that the tax position will be sustained upon audit. any of the above exist.
it is more likely than not that the tax position will be sustained upon audit.
All of the following are procedures for the computation of deferred income taxes except to all of these are procedures in computing deferred income taxes. identify the types and amounts of existing temporary differences. measure the total deferred tax liability for taxable temporary differences. measure the total deferred tax asset for deductible temporary differences and operating loss carrybacks.
measure the total deferred tax asset for deductible temporary differences and operating loss carrybacks.
The balance of the Pension Asset/Liability column in the pension worksheet should equal the balance of the Accumulated Pension Obligation. balance of the Plan Assets. net balance in the memo record. balance of the Projected Benefit Obligation.
net balance in the memo record.
Income tax expense is based on: taxable income. income from continuing operations. pretax income. operating income.
pretax income.
The pension asset/liability is the difference between the: accumulated benefit obligation and the market-related asset value. accumulated benefit obligation and the fair value of plan assets. projected benefit obligation and the fair value of plan assets. projected benefit obligation and the market-related asset value.
projected benefit obligation and the fair value of plan assets.
The pension asset/liability is the difference between the: projected benefit obligation and the fair value of plan assets. accumulated benefit obligation and the fair value of plan assets. accumulated benefit obligation and the market-related asset value. projected benefit obligation and the market-related asset value.
projected benefit obligation and the fair value of plan assets.
When goods or services are exchanged for cash or claims to cash (receivables), revenues are recognized. all of these answer choices are correct. realized. earned.
realized.
When a loss occurs in the current period on a profitable long-term contract, the loss is: recognized under the completed-contract method. not recognized under either the completed-contract method or the percentage-of-completion method. recognized under both the completed-contract method and the percentage-of-completion method. recognized under the percentage-of-completion method.
recognized under the percentage-of-completion method.
The last procedure (step) in the computation of deferred income taxes is to: measure deferred tax assets for each type of tax credit carryforward. measure the total deferred tax asset (liability) using the appropriate tax rate. identify the types and amounts of existing temporary differences. reduce deferred tax assets by a valuation allowance if necessary.
reduce deferred tax assets by a valuation allowance if necessary.
The interest on the projected benefit obligation component of pension expense is the same as the expected return on plan assets. may be stated implicitly or explicitly when reported. reflects the incremental borrowing rate of the employer. reflects the rates at which pension benefits could be effectively settled.
reflects the rates at which pension benefits could be effectively settled.
When a change in the tax rate is enacted into law, its effect on existing deferred income tax accounts should be reported as an adjustment to income tax expense in the period of change. considered, but it should only be recorded in the accounts if it reduces a deferred tax liability or increases a deferred tax asset. applied to all temporary or permanent differences that arise prior to the date of the enactment of the tax rate change, but not subsequent to the date of the change. handled retroactively in accordance with the guidance related to changes in accounting principles.
reported as an adjustment to income tax expense in the period of change.
The International Accounting Standards Board has proposed changes to IFRS pension accounting including all of the following except different presentation of pension costs in the income statement. a new category of pensions for accounting purpose - "contribution-based promises." requiring recognition of actuarial gains and losses over the expected service lives of employees. elimination of smoothing via the corridor approach.
requiring recognition of actuarial gains and losses over the expected service lives of employees.
In selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be the terms of payment in the contract. the inherent nature of the contractor's technical facilities used in construction. the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable. the method commonly used by the contractor to account for other long-term construction contracts.
the degree to which a reliable estimate of the costs to complete and extent of progress toward completion is practicable.
Recognition of tax benefits in the loss year due to a loss carryforward requires the establishment of a deferred tax liability. the establishment of a deferred tax asset. the establishment of an income tax refund receivable. only a note to the financial statements.
the establishment of a deferred tax asset.
When the additional liability exceeds the unrecognized prior service cost: the excess is debited to a contra equity account. no entry is necessary to record the liability. the Additional Pension Liability account is decreased. the Additional Pension Liability account is credited for the amount of the unrecognized prior service cost.
the excess is debited to a contra equity account.
A loss in the current period on a contract expected to be profitable upon completion is recognized in the current period under: neither the completed-contract nor percentage-of-completion methods. the percentage-of-completion method only. the completed-contract method only. both the completed-contract and percentage-of-completion methods.
the percentage-of-completion method only.
A loss in the current period on a contract expected to be profitable upon completion is recognized in the current period under: the completed-contract method only. neither the completed-contract nor percentage-of-completion methods. the percentage-of-completion method only. both the completed-contract and percentage-of-completion methods.
the percentage-of-completion method only.
The installment-sales method of recognizing profit for accounting purposes is acceptable if an unrealized profit account is credited. there is no reasonable basis of estimating the uncollectability of the sales price. the method is consistently used for all sales of similar merchandise. collections in the year of sale do not exceed 30% of the total sales price.
there is no reasonable basis of estimating the uncollectability of the sales price.
Deferred gross profit on installment sales is generally treated as a (n) deduction from installment sales. deduction from gross profit on sales. unearned revenue and classified as a current liability. deduction from installment accounts receivable.
unearned revenue and classified as a current liability.
The loss (gain) on repossession of merchandise is the difference between the estimated fair value of the merchandise and: unrecovered cost of the merchandise. the balance of the installment receivable. the deferred gross profit. its original cost.
unrecovered cost of the merchandise.
Prior service cost is amortized on a years-of-service method or on a straight-line basis over the average remaining service life of active employees. straight-line basis over the expected future years of service. straight-line basis over the average remaining service life of active employees or 15 years, whichever is longer. straight-line basis over 15 years.
years-of-service method or on a straight-line basis over the average remaining service life of active employees.
