Minarski Electronics sells computers and provides hardware maintenance services. On April 1^st, Minarski 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 $948 and the one-year unlimited maintenance/repair service costs $252. How much revenue does Minarski Electronics recognize for the month ended April 30^th, assuming that revenue is accrued monthly?

$21.00

$1,000

$807.50

$969.00

On July 15, 2016, Ortiz & Co. signed a contract to provide EverFresh Bakery with an ingredient-weighing system for a price of $91,200. The system included finely tuned scales that fit into EverFreshs automated assembly line, Ortizs proprietary software modified to allow the weighing sytem to function in EverFreshs automated system, and a one-year contract to calibrate the equipment and software on an as-needed basis. (Ortiz competes with other vendors who offer ongoing calibration contracts for Ortizs systems.) If Ortiz was to provide these goods and services separately, it would charge $61,000 for the scales, $10,000 for the software, and $29,000 for the calibration contract. Ortiz delivered and installed the equipment and software on August 1, 2016, and the calibration service commenced on that date.

Assume that the scales, software and calibration service are all separate performance obligations. How much revenue will Ortiz recognize in 2016 for this contract?

$0

$64,752

$91,200

$75,772

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On April 1^st, Bob the Builder entered into a contract of one-month duration to build a barn for Nolan. Bob is guaranteed to receive a base fee of $5,200 for his services in addition to a bonus depending on when the project is completed. Nolan created incentives for Bob to finish the barn as soon as he can without jeopardizing the structural integrity of the barn. Nolan offered to pay an additional 25% 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 25% and the probability of finishing a week early is 55%.

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What is the expected transaction price with variable consideration estimated as the expected value?

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$5,811

$5,200

$5,720

$4,940

Maas LLP developed software that helps farmers to plow their fields in a manner that prevents erosion and maximizes the effectiveness of irrigation. Sunny Dale paid a licensing fee of $28,000 for a copy of the software. Although Sunny Dale can use the software as long as it wants, Maas expects that Sunny Dale will use the software for approximately 5 years. Maas does not anticipate any further interaction with Sunny Dale following transfer of the license. How much revenue should Maas recognize in the first year of the contract?

$7,000

$0

$28,000

$5,600

Pita Pal sells fast-food franchises. Pita Pal receives $76,000 from a new franchisee for providing initial training, equipment, and furnishings that together have a stand-alone selling price of $76,000. Pita Pal also receives $36,300 per year for use of the Pita Pal name and for ongoing consulting services (starting on the date the franchise is purchased). Rachel became a Pita Pal franchisee on March 1, 2018, and on May 1, 2018 Rachel had completed training and was open for business. How much revenue in 2018 will Pita Pal recognize for its arrangement with Rachel?

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$112,300

$76,000

$0

$106,250

JRE2 Inc. entered into a contract to install a pipeline for a fixed price of $2,245,000. JRE2 recognizes revenue upon contract completion.

	Cost incurred	Estimated Cost to Complete
2015	$ 256,000	$ 1,580,000
2016	1,630,000	533,000
2017	480,000	0

In 2017, JRE2 would report gross profit (loss) of:

$(121,000).

$17,667.

$53,000.

$132,000.