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Question (Category: accounting)
16. the percentage-of-completion method is preferable to the completed contract method and should only be avoided if there is a lack of dependable estimates or inherent hazards cause forecasts to be doubtful. completion rates are certain. projects are more than five years to completion. profits are low. 17. todd sweeney is an artist who sells his work under consignment (he displays his work in local barbershops, and customers buy the work there). sweeney recently transferred a painting to a local barbershop. sweeney most likely should recognize revenue when: when the barbershop's right of return expires. when he transfers a painting to a barbershop. he paints the painting, as the painting is accreting. when the barbershop sells the painting. 1. when using the completed contract method of accounting for long-term contracts: estimated losses on the overall contract are recognized before the contract is completed. expenses are recorded each period, but revenue is only recognized when the contract is completed. use of this method is not permitted under generally accepted accounting principles. neither gains nor losses are recognized until the contract is completed. 2. under ifrs, revenue for a product sale should occur when: warrantee fulfillment is viewed as unlikely. inventory production is complete. the seller has transferred to the buyer the risks and rewards of ownership, and doesn't effectively manage or control the goods. the buyer has paid a preponderance of installment amounts due. 4. for a typical manufacturing company, the most common critical point for recognizing revenue is the date: the product is delivered. an order is received. production is completed. payment is received. 7. under gaap with respect to multiple-deliverable arrangements, if the revenue for a particular part of a multiple-part arrangement does not qualify for separate recognition, it is: never recognized. recognized when the contract is signed or persuasive evidence of an arrangement exists. recognized when revenue for the other parts are recognized. none of the above. 11. boomerang computer company sells computers with an unconditional right to return the computer if the customer is not satisfied. boomerang has a long history selling these computers under this returns policy, and can provide precise estimates of the amount of returns associated with each sale. boomerang most likely should recognize revenue: when boomerang delivers a computer to a customer. when a customer returns a computer. never, because the right of return is unconditional. when boomerang receives cash from the customer. 12. vsoe is necessary to separately recognize revenue in multiple-deliverable contracts for: all contracts that involve at least one non-software element. all service contracts. software contracts. all product contracts. 13. the cost recovery method of accounting for long-term contracts under ifrs is sometimes referred to as the: multi-step approach completed contract method zero profit method sales-neutral approach


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