1) Ford Motor company is considering alternate methods of accounting for the cash

discounts it takes for prompt payments. One method suggested was to record these

discounts as financial income when taken. Would this be proper? Why or why not?

2) When does a company satisfy a performance obligation? Identify the indicators of

satisfaction of a performance obligation.

3) The old version of the revenue recognition principle had two equal parts: earning of

revenue and realizability of revenue. Why has realizability been relegated to secondary

Importance?

4) What are the two types of losses you can encounter with accounting for long-term

contracts? What is the nature of each type of loss? How is each type accounted for?

8. What is the difference between a principal and an agent for determining the amount of

revenue to recognize? Why is it necessary to make this distinction?

9. What must a contract include for the contract to exist for purposes of revenue

recognition?