1a. Buffalo Inc. provides cleaning services and sells garbage bins to office clients. On June 1st, Buffalo delivered 100 garbage bins to a client, and also entered into a 5-year contract for Buffalo to provide cleaning services to that client. Which of the following is most likely to be true?

Revenue for the garbage bins and the cleaning services must be recognized on June 1st.

Revenue for the garbage bins is recognized on June 1st and no revenue will be recognized for the cleaning services until the end of the 5th year

Revenue for the garbage bins is recognized on June 1st and revenue for the cleaning service is recognized over the 5 years as those services are performed.

Binz company should not recognize any revenue until the end of the 5th year

1b. Moose Electricity sells computers and provides hardware maintenance services. On April 1st, Moose sold a package deal containing a computer and a one-year unlimited maintenance/repair service for the computer at a bundle price of $1,000. If sold separately, the computer costs $840 and the one-year unlimited maintenance/repair service costs $360. How much revenue per package does Moose Electricity recognize April, assuming that revenue is accrued monthly?

$1,000

$870

$725

$30

1c. Bear industries began construction on a new office building on January 1, 2015. The project is expected to take 2 years. At the time, Bear had a $2,500,000 loan (7%) and a $7,500,000 loan (10%) that were originally borrowed for other operational needs. What is the weighted average interest rate on the general debt that should be used in the interest capitalization calculation?

7%

7.5%

8.5%

9.25%

10%

1d. On April 1st, Rudolph entered into a contract of one-month duration to build a barn for Prancer. Rudolph is guaranteed to receive a base fee of $5,000 for his services in addition to a bonus depending on when the project is completed. Prancer created incentives for Rudolph to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Prancer offered to pay an additional 30% of the base fee if the project finished 2 weeks early and 10% if the project finished a week early. The probability of finishing 2 weeks early is 30% and the probability of finishing a week early is 60%. What is the expected transaction price with variable consideration estimated as the expected value?

$4,750

$5,000

$5,500

$5,750

1e. Assume Spider Company Uses the percentage-of-completion method. During the first year of a project, they recorded actual costs of $210,000, gross profit of $50,000, billings of $225,000 and cash collections of $190,000. How will the net of Construction in Process and Billings accounts be shown on the balance sheet?

$15,000 liability

$15,000 asset

$20,000 asset

$35,000 liability

$35,000 asset