Chp. 6 smartbook

In the first period in which the loss become evident.

When is a loss recognized on a long-term contract? When the construction costs are in excess of billings. In the first period in which the loss become evident. In the period the contract is completed. When the billings are not collected during the period.

At the completion of the contract.

When is gross profit recorded in the construction in progress account for a long-term contract accounted for upon completion? At the payment date. At the completion of the contract. At the inception of the contract. At the end of each period.

Revenue recognition over time

Which method provides a better measure of a company's economic activity each period? Both methods provide the same measure of economic activity each period Revenue recognition upon completion Revenue recognition over time

Output-based and Input-based methods

'' Methods that can be used to estimate progress toward completion are referred to as?

Future events

A contract is said to have variable consideration if the price depends on the outcome of?

The seller's role is to combine those products and services prior to delivery or completion.

A long-term contract that includes many products and services that are capable of being distinct, may be accounted for as a single performance obligation because? The seller customarily does not sell them separately. They are specified in a single explicit contract. The seller's role is to combine those products and services prior to delivery or completion.

False Reason: Prepayments are not considered performance obligations because they are not a promise to transfer goods or services.

A prepayment from a customer typically creates a performance obligation. TorF?

Contract

An agreement that creates legally enforceable rights and obligations.

the same

As compared to revenue recognition over time, the total amount of gross profit recognized related to revenue upon completion is? smaller. greater. the same.

Distinct from other goods and services in the contract.

For a promise to provide a good or service to be accounted for as a separate performance obligation, the good or service must be?

Stand-alone selling price

Is the amount at which the good or service is sold separately under similar circumstance.

True Reason: Most are viewed as single performance obligations because a single bundled product or service is delivered.

Most long-term contracts should be viewed as single performance obligations. TorF?

Transaction price.

The amount the seller expects to be entitled to receive from the customer in exchange for providing goods or services is referred to as the?

Deferred Revenue

Prepayments by customers for future goods or services should initially be recorded as?

Performance obligation

Revenue is recognized when the.........is satisfied.

Core Revenue Recognition Principle

The concept or principle that states that companies should recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for goods and services is referred to as the?

transferred to customers

The core revenue recognition principle stipulates that companies recognize revenue when goods or services are contracted for in an explicit contract transferred to customers realizable

Pattern of recognition of the related gross profit.

The essential difference between revenue recognition over time and upon completion relates to the? amount of gross profit recognized for the project. pattern of recognition of the related gross profit. amount of revenue recognized for the project.

Residual

The stand-alone price of a good or service may be estimated using the adjusted market assessment approach, the expected cost plus margin approach, or the.....approach

Customer accepted asset Customer has physical possession of the asset Customer has legal title to the asset

Which of the following are key indicators that control of goods or services has been transferred to the customer? (Select all that apply.) Customer accepted asset Customer signed a legally binding contract Customer has physical possession of the asset Customer has legal title to the asset

Buyer has legal title to the asset Buyer has accepted the asset

Which of the following likely will lead to revenue recognition at a point in time? (Select all that apply.) Seller has legal title to the asset Buyer has legal title to the asset Buyer has accepted the asset Seller has possession of the asset

Total expense Total profit Total revenue

Which of the following will not differ between revenue recognized over time and revenue recognized at completion? (Select all that apply.) Total expense The timing of recognition Total profit Total revenue