TAKING IT FURTHER The contract-based approach requires revenue to be recognized at the amount a busi- ness expects to be entitled to. If Nicolet offers cash discounts for early payment, how might this affect its revenue recognition? (Hint: Significant cash discounts are a type of variable consideration.) P11-7A Czyz and Ng are accountants at Kwick Kopy Printers. Kwick Kopy has not adopted the revaluation model for accounting for its property, plant, and equipment. The accountants are having disagreements over the following transactions during the fiscal year ended December 31, 2017: 1. Kwick Kopy bought equipment on January 1, 2017, for $80,000, including installation costs. The equipment has a useful life of five years. Kwick Kopy depreciates equipment using the double diminishing-balance method. "Since the equipment as installed in our system cannot be removed without considerable damage, it will have no resale value. It should not be depreciated but, instead, expensed immediately," Czyz argues. 2. Depreciation for the year was $43,000. Since the company's profit is expected to be low this year, Czyz suggests deferring depreciation to a year when there are higher profits. 3. Kwick Kopy purchased equipment at a fire sale for $36,000. The equipment would normally have cost $50,000. Czyz believes that the following entry should be made: Equipment 50,000 Cash 36,000 Gain on Fair Value Adjustment of Equipment 14,000 4. Czyz says that Kwick Kopy should carry its furnishings on the balance sheet at their liquidation value, which is $30,000 less than cost. 5. Kwick Kopy rented office space for one year, effective September 1, 2017. Six months of rent at $3,000 per month was paid in advance. Czyz believes that the following entry should be made on September 1: Rent Expense 18,000 Cash 18,000 6. Land that cost $41,000 was appraised at $60,000. Czyz suggests the following journal entry: Land 19,000 Gain on Fair Value Adjustment of Land 19,000 Ng disagrees with Czyz in each of the situations