#1-A

Aria Perfume, Inc., sold 3,820 boxes of white musk soap during January of 2021 at the price of $120 per box. The company offers a full refund to unsatisfied customers for any product returned within 30 days from the date of purchase. Based on historical experience, Aria expects that 2% of sales will be returned. How many performance obligations are there in each sale of a box of soap? How much revenue should Aria recognize in January?

1-B

TopChop sells hairstyling franchises. TopChop receives $42,000 from a new franchisee for providing initial training, equipment, and furnishings that have a stand-alone selling price of $42,000. TopChop also receives $22,000 per year for use of the TopChop name and for ongoing consulting services (starting on the date the franchise is purchased). Carlos became a TopChop franchisee on July 1, 2021, and on August 1, 2021, had completed training and was open for business. How much revenue in 2021 will TopChop recognize for its arrangement with Carlos?

1-C

A construction company entered into a fixed-price contract to build an office building for $30 million. Construction costs incurred during the first year were $10 million and estimated costs to complete at the end of the year were $15 million. The company recognizes revenue over time according to percentage of completion. How much revenue and gross profit or loss will appear in the companys income statement in the first year of the contract?