Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In which of the following situations is it inappropriate for the seller to recognize revenue at the time of sale under ASPE? Question 18 options:

In which of the following situations is it inappropriate for the seller to recognize revenue at the time of sale under ASPE?

Question 18 options:


a)

The buyer has a right to return the goods and the amount of the future returns cannot be reasonably estimated.


b)

The selling price of the goods is less than the normal selling price.


c)

Payment was made by cheque.


d)

The customer has an outstanding account balance with the seller but has a history of timely payments.

Question 19 (1 point)


When accounting for a sales rebate under IFRS, an entity can measure the expected rebates claimed by using the expected value or the most likely amount.

Which of the following statements regarding accounting for rebates is true?

Question 19 options:


a)

Rebates are considered to be a form of fixed consideration.


b)

The most likely amount method takes the range of possible outcomes and considers the probability of each.


c)

The most likely amount method is most appropriate when the likely outcome is one of just a few choices.


d)

The expected value method takes the one outcome that is considered to be the most likely and uses this as the measurement.

Question 20 (1 point)


Which of the following situations correctly uses IFRS to record revenue?

Question 20 options:


a)

North Co. offers rebates of 2% to South Co. if South purchases at least 40,000 units in a year. In the first quarter of the year, North sells 15,000 units to South at a sales price of $220,000, and records revenue in this amount. In prior years, North sold over 40,000 units to South.


b)

On January 12, 2020, TCT Inc. shipped merchandise with a retail value of $25,000 on consignment to Avian Store. TCT recorded sales revenue of $25,000 with COGS of $18,000 on January 12 for the transaction.


c)

Construction Ltd. enters into a contract with a customer to build an office building for $2,000,000, with a performance bonus of $200,000 if the building is ready by July 1, 2021. The contract requirements are similar to contracts that Construction has performed previously, and management estimates that there is a 70% probability that the contract will be completed by July 1, 2021. Given the uncertainty, management didn’t include the bonus in the total transaction price.


d)

Lang Co. sold 100 units to Trung Co. on account for a selling price of $14,500. Lang grants the right to return products that do not sell in the four months following delivery. Past experience indicates that the normal return rate is 12%. When Trung returned five products, Lang recorded a debit to refund liability for $725.

Question 21 (1 point)


Which of the following is an indicator that an entity may be acting as an agent as part of a principal-agent arrangement?

Question 21 options:


a)

The entity’s consideration is in the form of a commission.


b)

The entity bears inventory risk.


c)

The entity establishes the selling price for customers.


d)

The entity is exposed to credit risk.

Step by Step Solution

3.43 Rating (169 Votes )

There are 3 Steps involved in it

Step: 1

ANSWER 1 B The selling price of the goods is less than the normal selling price Some retailers sell one or more standard goods below cost and the loss so sustained is made good by selling some other p... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Document Format ( 2 attachments)

PDF file Icon
635e3537e11e9_182363.pdf

180 KBs PDF File

Word file Icon
635e3537e11e9_182363.docx

120 KBs Word File

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Dean Karlan, Jonathan Morduch

1st edition

978-0077332587, 007733258X, 978-0077332648, 77332644, 978-1259163531

More Books

Students also viewed these Economics questions

Question

Explain the term knowledge- based pay system.

Answered: 1 week ago