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Electric Eddie's sells many different kinds of electronic products and services. While Electric Eddie cmployees have great expertise nelated to electronics, they unfortunately do not

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Electric Eddie's sells many different kinds of electronic products and services. While Electric Eddie cmployees have great expertise nelated to electronics, they unfortunately do not have much familiarity with accountine. Accoedingly, they have hired you to advise them on a number of financial reporting matters related to revenue recognition. Electric Eddic's fiscal year ends on Dec. 31. They prepare their financial statements in accordance with US G.MP, and for purposes of this problem, please assume that they will "adopt" ASU 2014-09, "Revenue from Contracts with Customers", on January 1. 2018. Use the following information for Parts A through C. On July 13,2016, an apartment complex signed a coetract which requested that Electric Eddie's deliver one flat panel television to the complex each month for the next twelve months, with the first television being delivered on July 31,2016, and with subsequent deliveries being made on the last day of each month. According to the contract, the apartment will pay Electric Eddie's $400 within 10 days after each delivery. The customer has a strong credit rating, and as a result, there is no concem about the customer's ability to pay. While Electric Eddie does not consider it probable that the customer will exercise this right, the apartment complex has the option to cancel the contract at any time after the eighth delivery (i.e. the contract may be cancelod by the client after the Fehruary 28, 2017 delivery). Notification of cancelling the remainder of the contract must be received by Flectric Eddie by the 20 day of each month; otherwise, the apontment complex is required to receive and pay for that month's delivery. Electric Eddie purchases the flat panel televisions from their supolier at a cost of $170 per television. A. (3) Assuming that all deliveries ate made as scheduled, how much revenue, if any, may Electric Eddie report for the contract during their fiscal-year ending Dec. 31.2016 ? B. (3) In accordance with US GAAP, weeld Electric Eddie be required to report a liability on their Dec. 31. 2016 Balance Shoet to recond their obligation for the remaining deliveries on the contract described above? BRIEFL. support your answer. B. (3) In accordance with US GAAP, would Electric Eddie be required to report a Liahility on their Dec. 31, 2016 Balance Sheet to record their obligation for the remaining deliveries on the contract deseribed above? BRIEFLY support your answer. 2 C. (3) Suppose that the contract was signed on July 13, 2018 (rather than 2016), but that all other terms of the contract remained identical. Would Electric Eddie be required to report a liability on their Dec. 31, 2018 Balance Sheet to record the remaining performance obligations related to the contract? If 50 , what is the amount of the liability? If NOT, would investors know about the remaining performance obligations? D. (3) In 2018, Electric Edde began selling 72 inch screen televisions. Customers could either pay $4,000 of cash, or make 48 monthly payments of $120 per month. Assuming that a customer that selects the monthly payment plan and receives "significant benefits of financing, what are the implications to Electric Eddie for recognizing revenue for that customer? A. Revenue Recognition mus be deferred until all of the payments are 3 collected. B. The revenue will be decomposed into a "Sales" and a "Financing Revenue" (i.e. "Interest") stream. C. Both A and B D. None of the above E. (3) Beginning in 2018, Electric Eddie decided to create a "customet loyalty" program. A customer would earn "one point" for each dollar of merchandise purchased. When a customer earned 1,000 "points", the customer would receive a coupon entitling the customer to a coupon which was worth $50 of "free merchandise" at Electric Eddie's. On February 1, 2018, a customer purchased computing equipment at a price of $1,000, and thus received a $50 coupon. The equipment sold had a cost of $400, which is a normal margin in this industry. Assuming that 100% of coupons will be redeened, what jourmal entry should Electric Eddie report on February 1, 2018 to record the transaction

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