Acct chapter 3 smartbook

When a contract asset is written down because it is deemed to be impaired, Multiple choice question. a loss will be recognized. neither a gain or loss will be recognized. a gain will be recognized.

a loss will be recognized.

If an entity receives payment prior to satisfying its performance obligation under a contract, the discrepancy between when the payment is received and when the obligation is satisfied is considered Multiple choice question. a receivable on the balance sheet. a significant financing component. a loss in the period the payment is received.

a significant financing component.

If an entity receives payment prior to satisfying its performance obligation under a contract, the discrepancy between when the payment is received and when the obligation is satisfied is considered a loss in the period the payment is received. a receivable on the balance sheet. a significant financing component.

a significant financing component.

When a firm delivers goods to another party but retains control over them, a exists.

consignment arrangment

When over the goods and services that comprise the performance obligation is transferred to the customer, that performance obligation is considered satisfied.

controll

A conveys a right to access certain intellectual property, such as trade names.

franchise agrerement

The first step in the five-step revenue recognition model is to Multiple choice question. recognize revenue when the entity satisfies a performance obligation. identify the contract(s) with a customer. determine the transaction price. identify the performance obligations in the contract.

identify the contract(s) with a customer.

Capitalized contract costs need not be amortized if the amortization period would be Multiple choice question. one year or less. more than six months. five years or less. more than one year.

one year or less.

Determining the extent to which revenue should be recognized based on the milestones reached to date is an example of an method. Need help? Review these concept resources.

output

A is a promise to provide goods or services.

performance obligation

Firms are required to disclose Multiple select question. significant judgments made in the application of the standard. the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied. a list of the individuals working toward satisfying the performance obligations. an explanation of when the firm expects to satisfy outstanding performance obligations.

significant judgments made in the application of the standard. the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied. an explanation of when the firm expects to satisfy outstanding performance obligations.

According to a study by Deloitte, approximately what percentage of firms disclosed prior to the new standard effective date that they expected no material financial effects from adopting it. Multiple choice question. 25% 100% 75% 50% 10%

50%

Which of the following entities would be considered a principal? Multiple select question. A firm with multiple clients and whose consideration is in the form of a commission. A business that sells its goods on an online marketplace. An artist whose works are sold in a gallery on behalf of the artist, with the gallery keeping a portion of the selling price. A broker that sells real estate on behalf of a client.

A business that sells its goods on an online marketplace. An artist whose works are sold in a gallery on behalf of the artist, with the gallery keeping a portion of the selling price.

What is a practical expedient? Multiple choice question. An option not to adopt the standard if it is too difficult to do so. A departure from the correct application of the standard that is permitted when is too difficult to implement. A departure from the correct application of the standard that is permitted when the financial statement effect of the departure is minimal. An option to delay implementation of the standard if it is too difficult to do so.

A departure from the correct application of the standard that is permitted when the financial statement effect of the departure is minimal.

Where is revenue disaggregation disclosed? Multiple choice question. A note disclosure. The statement of cash flows. The face of the balance sheet. The face of the income statement.

A note disclosure.

Which of the following would be considered a customer under ASC Topic 606? Multiple choice question. An entity that is considering purchasing goods from the company. A supplier of goods to the company A party that has contracted with an entity to obtain goods manufactured by the company. A purchaser of excess land held by the company and not used in its operations.

A party that has contracted with an entity to obtain goods manufactured by the company.

Which one of the following statements applies to transaction price allocations? Multiple choice question. Allocations should be in proportion to the standalone prices of the performance obligations when their total is not equal to the transaction price. Allocations should only be done when the total of the standalone prices of the performance obligations are equal to the transaction price. Allocations result in gains or losses when the total of the standalone prices of the performance obligations are not equal to the transaction price.

Allocations should be in proportion to the standalone prices of the performance obligations when their total is not equal to the transaction price.

What is a portfolio approach? Multiple choice question. Application of the five-step model to a group of similar contracts, rather than an analysis of each individual contract. Application of the five-step model to a company's investment portfolio. Application of the five-step model to the company as a whole rather than to individual contracts.

Application of the five-step model to a group of similar contracts, rather than an analysis of each individual contract.

How are contract costs amortized? Multiple choice question. Contract costs are not amortized, but are subject to an impairment test. Over a period not to exceed five years. As the performance obligation is fulfilled.

As the performance obligation is fulfilled.

Which of the following exists when a firm bills a customer for goods but retains physical possession at the customer's request? Multiple choice question. Bill-and-hold arrangement Franchise agreement License Consignment arrangement

Bill-and-hold arrangement

When a firm delivers goods to another party but retains control over them, a exists.

Blank 1: consignment Blank 2: arrangement or agreement

Which of the following are required to be disclosed regarding contract balances? Multiple select question. Explanation of significant changes in contract assets and liabilities. Amount of revenue recognized in the current period as a result of changes in the transaction price. Beginning and ending balances of contract assets and liabilities. Amount of revenue recognized in the prior period that was excluded from the beginning contract liability balance.

Explanation of significant changes in contract assets and liabilities. Amount of revenue recognized in the current period as a result of changes in the transaction price. Beginning and ending balances of contract assets and liabilities.

True or false: Under IFRS, collection must be more certain for it to be considered "probable" than under U.S. GAAP. True false question.TrueFalse

False

Which of the following is not qualitative information required to be disclosed regarding performance obligations? Multiple choice question. How the contract price was calculated. Nature of the goods and services covered. Warranties provided. Point in time when a performance obligation is deemed to have been satisfied.

How the contract price was calculated.

Which of the following is not qualitative information required to be disclosed regarding performance obligations? Multiple choice question. Nature of the goods and services covered. How the contract price was calculated. Warranties provided. Point in time when a performance obligation is deemed to have been satisfied.

How the contract price was calculated.

When there is variable consideration, how is the transaction price determined? Multiple choice question. Revenue may not be recognized until the amount to be received is certain. In order to be conservative, it is the minimum amount that might eventually be received without regard to reversal. It is a most likely amount or a probability-weighted expectation, but such that it is probable a significant reversal will not be necessary.

It is a most likely amount or a probability-weighted expectation, but such that it is probable a significant reversal will not be necessary.

Which of the following is not a key financial statement effect of ASC Topic 606 on the technology industry? Multiple choice question. Customer options to purchase additional copies of software may now be deemed to be separate performance obligations. Consideration payable to customers is now estimated rather than based on the maximum potential amount. Warranties are now deemed to be separate performance obligations whey they include preventative maintenance. Revenue from certain manufacturing for private labels is now recognized over time rather than at a point in time.

Revenue from certain manufacturing for private labels is now recognized over time rather than at a point in time.

When the customer has the right to access intellectual property as it exists at any point in time, which of the following statements is true? Multiple choice question. Revenue is recognized over time. Revenue is recognized at the time the contract is signed. Revenue is recognized when payment is received. Revenue may not be recognized at any time.

Revenue is recognized over time.

What criteria must be present for consideration due to a customer to be treated as a separate transaction involving a purchase of goods or services from the customer? Multiple select question. The value of the goods or services must be certain. The consideration must be for something other than goods or services. The consideration must be for goods or services. The value of the goods or services must be reasonably estimated.

The consideration must be for goods or services. The value of the goods or services must be reasonably estimated.

Which of the following are required for two or more contracts to be treated as a single contract? Multiple select question. The contracts have a single business purpose. The contracts were entered into around the same time with the same customer. The customer would save money by having them treated as a single contract. The contracts were negotiated together.

The contracts have a single business purpose. The contracts were entered into around the same time with the same customer. The contracts were negotiated together.

Which of the following is not an indicator that control of goods or services has been transferred to the customer? Multiple choice question. The customer has placed an order for goods or services. The customer has a legal obligation to pay for the goods or services. Legal title and/or physical possession has been conveyed to the customer. The customer has accepted the goods or services.

The customer has placed an order for goods or services.

Which of the following are characteristics of a "distinct" performance obligation? Multiple select question. The customer is able to benefit from the goods or services separately from any other goods or services under the contract. The customer is billed separately for the goods or services. The goods or services are highly interdependent with other goods or services under the contract. The firm's obligation to provide the goods or services can be separately identified.

The customer is able to benefit from the goods or services separately from any other goods or services under the contract. The firm's obligation to provide the goods or services can be separately identified.

In which of the following cases is a performance obligation not considered to have been satisfied over time? Multiple choice question. The customer receives the goods it purchased at a point in time, but pays for those goods over several installments. The customer simultaneously obtains and consumes the goods and services it purchased. Performance under the contract enhances an asset under the customer's control. Performance under the contract creates an asset with no alternative use and the firm has the right to receive payment from the customer.

The customer receives the goods it purchased at a point in time, but pays for those goods over several installments.

n which of the following cases is a performance obligation not considered to have been satisfied over time? Multiple choice question. The customer simultaneously obtains and consumes the goods and services it purchased. Performance under the contract creates an asset with no alternative use and the firm has the right to receive payment from the customer. Performance under the contract enhances an asset under the customer's control. The customer receives the goods it purchased at a point in time, but pays for those goods over several installments.

The customer receives the goods it purchased at a point in time, but pays for those goods over several installments.

Which of the following is not an indicator that a consignment arrangement has been made? Multiple choice question. The entity that received the product is not obligated to pay for it unless it is sold. The entity that delivered the product has the right to require that the product be returned or delivered elsewhere. The entity that delivered the product still controls it until it is resold. The entity that received the product has displayed it for resale.

The entity that received the product has displayed it for resale.

Which of the following is not an indicator that a consignment arrangement has been made? Multiple choice question. The entity that received the product is not obligated to pay for it unless it is sold. The entity that delivered the product still controls it until it is resold. The entity that delivered the product has the right to require that the product be returned or delivered elsewhere. The entity that received the product has displayed it for resale.

The entity that received the product has displayed it for resale.

Which of the following are indicators that a firm is an agent rather than a principal? Multiple select question. The firm does not control the prices of the goods or services. The firm bears inventory risk. The firm's consideration is in the form of a commission. The firm has primary responsibility for fulfilling the contract terms.

The firm does not control the prices of the goods or services. The firm's consideration is in the form of a commission.

Which of the following are criteria required for control to be considered transferred in bill-and-hold arrangements? Multiple select question. The firm has the ability to transfer the product to another customer. The reason for the arrangement is not substantive. The firm does not have the ability to use the product. The product is ready for physical transfer to the customer. The product is identified separately as belonging to the customer.

The firm does not have the ability to use the product. The product is ready for physical transfer to the customer. The product is identified separately as belonging to the customer.

Which of the following are characteristics of a "distinct" performance obligation? Multiple select question. The firm's obligation to provide the goods or services can be separately identified. The goods or services are highly interdependent with other goods or services under the contract. The customer is billed separately for the goods or services. The customer is able to benefit from the goods or services separately from any other goods or services under the contract.

The firm's obligation to provide the goods or services can be separately identified. The customer is able to benefit from the goods or services separately from any other goods or services under the contract.

Which of the following criteria must be met for a contract modification to be considered a new, separate contract? Multiple select question. The increase in the contract price reflects the stand-alone selling price of the additional goods or services. The modification of the contract extends the timing of the deliverables. The modification adds distinct goods or services to the agreement. The modification is in excess of $5,000.

The increase in the contract price reflects the stand-alone selling price of the additional goods or services. The modification adds distinct goods or services to the agreement.

True or false: When the price associated with a variable consideration transaction changes in a subsequent period, the new, more recent information is used, which could affect the amount of revenue recognized in the subsequent period. True False

True

Which of these factors is the distinguishing characteristic of a sale of intellectual property, as opposed to a license? Multiple choice question. Under a sale, payment is due immediately rather than over time. Under a sale, the customer receives a warranty. Under a sale, the customer's use of the intellectual property is not limited. Under a sale, the customer's use of the intellectual property is for a certain period of time.

Under a sale, the customer's use of the intellectual property is not limited.

Which of these factors is the distinguishing characteristic of a sale of intellectual property, as opposed to a license? Multiple choice question. Under a sale, the customer's use of the intellectual property is not limited. Under a sale, the customer receives a warranty. Under a sale, payment is due immediately rather than over time. Under a sale, the customer's use of the intellectual property is for a certain period of time.

Under a sale, the customer's use of the intellectual property is not limited.

When is consideration due to a customer treated as a separate transaction involving a purchase of goods or services from the customer? Multiple choice question. When the payment is for distinct goods or services whose value can reasonably be estimated. When the payment is for distinct goods or services, regardless of whether the value can be estimated. When the payment is made under a separate contract. Any time consideration is due to the customer, it is treated as a separate transaction.

When the payment is for distinct goods or services whose value can reasonably be estimated.

If a firm receives payment before a contact can be identified, revenue may be recognized when the consideration is nonrefundable and Multiple select question. the profit will be amortized over the term of the contract. the contract has been terminated. there is less than 50% remaining obligations to transfer goods or services. there are no remaining obligations to transfer goods or services to the customer.

the contract has been terminated. there are no remaining obligations to transfer goods or services to the customer.

If a contract modification does not add goods or services that are distinct from those that have already been transferred, Multiple choice question. the original contract is considered to have been canceled. the firm has the right to invoice the full contract amount at the time of modification. there is a cumulative catch-up adjustment.

there is a cumulative catch-up adjustment.