ACG 302 Exam 2 Concept Questions

The core revenue principle states that:

companies recognize revenue when goods or services are transferred to customers for the amount the company EXPECTS to be entitled to receive in exchange for those goods or services

For the lessee to account for a lease as a FINANCE lease, the lease must meet:

ANY ONE of the FIVE criteria specified by GAAP regarding accounting for leases

One of the five criteria for a finance lease specifies that the lease term be equal to or greater than:

THE MAJOR PART of the remaining economic life of the leased property

When accounting for revenue over time for a long-term contract, the percentage of completion used to recognize revenue in the first year usually is determined by measuring:

costs incurred in the first year, divided by estimated TOTAL COSTS

Damon is the lessee in connection with a finance lease. Damon will NOT record:

depreciation expense

Which of the following is considered a performance obligation?

extended warranties on electronic products

Which of the following is one of the steps for recognizing revenue?

identify the performance obligations of the contract

In connection with a lease of more than 12 months, the lessee always will record each of the following EXCEPT:

interest revenue

The appropriate asset value reported in the balance sheet by the lessee for an operating lease is:

present value of the lease payments

For contracts that include more than one separate performance obligation:

the contract price is allocated to each performance obligation in proportion to the obligations' stand-alone selling prices