discrete earnings process often

1- includes a critical event.

2- includes confidential information.

3- requires that revenues can only be recognized after full payment has been received.

4- requires that goods be sold at a substantial discount.

Which of the following is typically not a characteristic of a constructive obligation?

1- It is a term that is explicitly stated in the contract.

2- It may be created through past practice or experience.

3- It may be created though a signal to potential customers.

4- It is not legally enforceable.

Practice Question 9

Under the completed-contract method, which of the following are reported each period during construction?

1- Revenues.

2- Gross profit.

3- Costs incurred.

4- All of the above are reported each period under the completed contract method.

Practice Question 21

Which of the following indicate that a seller's performance obligations have been satisfied?

1- The customer can direct the use of the good or service purchased without hindrance from the seller.

2- The customer can prevent others from receiving any benefit from the good or service purchased.

3- The customer has legal title to, and physical possession of, the asset purchased.

4- All of the above indicate satisfaction of a seller's performance obligations

.

Exercise 6-28

On May 31, 2020, Eisler Company consigned 80 freezers, costing $500 each, to Remmers Company. The cost of shipping the freezers amounted to $740 and was paid by Eisler Company. On December 30, 2020, a report was received from the consignee, indicating that 40 freezers had been sold for $750 each. Remittance was made by the consignee for the amount due after deducting a commission of 6%, advertising of $200, and total installation costs of $320 on the freezers sold.

Calculate the inventory value of the units unsold in the hands of the consignee.

Inventory value of units

unsold $enter the Inventory value of units unsold in dollars

LINK TO TEXT

Calculate the profit for the consignor for the units sold.

Profit on consignment sales

$enter the Profit on consignment sales in dollars

LINK TO TEXT

Calculate the amount of cash that will be remitted by the consignee.

Remittance from consignee

$enter the Remittance from consignee in dollars

Terms negotiated by a party to the contract that are more favourable than normal are called

barter transactions.

concessionary terms.

credit terms.

arm's length terms.

Testbank Question 12

Control of an asset normally coincides with

1- transfer of legal title to the buyer.

2- transfer of both possession and legal title to the buyer.

3- the receipt of payment from the buyer.

4- transfer of possession to the buyer.

Under IFRS, where a right to return exists,

1- a refund liability is recognized.

2- sales returns and allowances are recognized as contra accounts to Revenues and Accounts Receivable.

3- this right is disclosed in the financial statements; no accrual necessary.

4- this right does not need to be disclosed or accrued anywhere.

Testbank Question 41

Manson Construction Corp. has consistently used the percentage-of-completion method. In 2020, Manson started work on a $10,500,000 construction contract that was completed in 2021.

The following information was taken from Manson's 2020 accounting records:

Billings to date$3,300,000Costs incurred3,150,000Collections to date2,100,000Estimated costs to complete6,300,000

Under the earnings approach, what amount of gross profit should Manson recognize in 2020 on this contract

1- $700,000

2- $525,000

3-$350,000

4- $1,050,000

Under ASPE, when selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

1- the terms of payment in the contract.

2- the inherent nature of the contractor's technical facilities used in construction.

3- the method commonly used by the contractor to account for other long-term construction contracts.

4- the degree to which a reliable estimate of the costs to complet and extent of progress toward completion can be made.

Under ASPE, when selecting an accounting method for a newly contracted long-term construction project, the principal factor to be considered should be

1-the terms of payment in the contract.

2- the inherent nature of the contractor's technical facilities used in construction.

3- the method commonly used by the contractor to account for other long-term construction contracts.

4- the degree to which a reliable estimate of the costs to complet and extent of progress toward completion can be made.

If an entity sells on credit, the risk that the customer will not pay is called

1- price risk.

2- credit risk.

3- commercial substance.

4- credit policy.

Where there are potentially multiple performance obligations within a single contract, if products or services are interdependent and interrelated, they must be

1- combined under a new contract.

2- combined and reported as a single performance obligation.

3- sold separately.

4- accounted for as multiple performance obligations.

Conditional rights should be reported on the statement of financial position

1- as receivables.

2- as contract assets.

3- only once the conditions have been met.

4- as contract liabilities

When a contract becomes unprofitable to an entity, this is called a(n)

1- onerous contract.

1- uncompleted contract.

3- unenforceable contract.

4- zero-profit contract.