1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
lina2011 [118]
3 years ago
15

What are the five key steps to applying the revenue recognition principle? 2. What are indicators that control has passed from t

he seller to the buyer, such that it is appropriate to recognize revenue at a point in time? 3. Under what circumstances can sellers recognize revenue over time?
Business
1 answer:
LenKa [72]3 years ago
6 0

Answer:

The Five Steps to applying the revenue recognition principle

1. Identify the contract with a customer.

2. Identify the performance obligation(s) in the contract.

3. Determine the transaction price.

4. Allocate the transaction price to the performance obligations.

5. Recognize revenue when (or as) each performance obligation is satisfied.

Indicators that Control has Passed from the Seller to the Buyer

A performance obligation is satisfied at a single point in time when control is transferred to the buyer at a single point in time. This often occurs at delivery. Five key indicators are used to decide whether control of a good or service has passed from the seller to the buyer. The customer is more likely to control a good or service if the customer has:

1. An obligation to pay the seller.

2. Legal title to the asset.

3. Physical possession of the asset.

4. Assumed the risks and rewards of ownership.

5. Accepted the asset.

Under what circumstances can sellers recognize revenue over time

<em>if at least one of the following three criteria is met: </em>

1. The customer consumes the benefit of the seller's work as it is performed,

2. The customer controls the asset as it is created, or

3. The seller is creating an asset that has no alternative use to the seller, and the seller can receive payment for its progress even if the customer cancels the contract.

You might be interested in
EZ-Tax is a tax accounting practice with partners and staff members. Each billable hour of partner time has a $800 budgeted pric
Harlamova29_29 [7]

Answer:

EZ-Tax

                                                      Partner                 Staff             Total

a. Sales price variance             $104,000            ($110,000)      ($6,000) U

b. Activity variance                   $160,000           $420,000     $580,000 F

c. Mix variance                           $85,000           $180,000     $265,000 F

d. Quantity variance                $189,000             $70,000     $259,000 F

Explanation:

a) Data and Calculations:

                                                      Partner                 Staff

Budgeted billable rate per hour   $800                    $210    

Budgeted variable cost per hour    375                      120

Budgeted billable hours              5,000                20,000

Budgeted revenue             $4,000,000        $4,200,000

Budgeted variable cost         1,875,000          2,400,000

Actual revenue                  $4,264,000         $4,510,000

Actual billable hours                   5,200                22,000

Actual billable rate per hour       $820                   $205

Budgeted billable rate per hour $800                    $210

Variance in price                           $20                       ($5)

Sales price variance            $104,000            ($110,000)      ($6,000)

Sales price variance = (Standard price - Actual price) * Actual billable hours

= ($800 - $820) * 5,200 + ($210 - $205) * 22,000

= $20 * 5,200 + ($5) * 22,000

= $104,000 - 110,000

= $6,000 U

Activity variance = (Actual billable hours - Standard billable hours) * Standard rate

= (5,200 - 5,000) * $800 + (22,000 - 20,000) * $210

= (200 * $800) + (2,000 * 210)

= $160,000 + 420,000

= $580,000 F

                                                  Partner                 Staff        Total

Budgeted revenue             $4,000,000        $4,200,000   $8,200,000

Budgeted variable cost         1,875,000          2,400,000      4,275,000

Budgeted contribution       $2,125,000         $1,800,000   $3,925,000

Actual revenue                  $4,264,000         $4,510,000   $8,774,000

Actual variable cost              1,950,000          2,640,000    4,590,000

Actual contribution             $2,314,000         $1,870,000   $4,184,000

Quantity variance                 $189,000              $70,000     $259,000

Quantity variance = Budgeted contribution - Actual contribution

= $3,925,000 - $4,184,000

= $259,000 F

Mix Variance:

Standard contribution margin  $425                  $90

Volume variance                         200                2,000

Mix variance =                     $85,000           $180,000

3 0
2 years ago
Selling and pledging accounts receivable LO C3 On June 30, Petrov Co. has $128,700 of accounts receivable. July 4 Sold $7,245 of
irakobra [83]

Answer:

Explanation:

The journal entries are shown below:

On July 4:

Accounts receivable A/c Dr $7,245

          To Service revenue A/c $7,245

(Being service provided is recorded)

Cost of goods sold A/c Dr $5,000

           To Merchandise inventory A/c $5,000

(Being inventory sold at cost)

On July 9:

Cash A/c Dr $19,200

Factory fee expense A/c Dr $800

         To Accounts receivable A/c $20,000

(Being payment is received)

On July 17:

Cash A/c Dr  $5,859

         To Accounts receivable A/c  $5,859

(Being cash is received)

On July 27:

Cash A/c Dr  $10,000

   To Notes payable A/c  $10,000

(Being the amount is borrowed)

No journal entry required

4 0
3 years ago
A food truck is an example of which kind of distribution channel?
Schach [20]
Did you ever find the answer?

4 0
4 years ago
Read 2 more answers
Based on this research, which activity is this
Aneli [31]

Answer: conducting lectures in sustainable agriculture

Explanation: the description states that they help with environmental rights there for leading to agriculture and showing why they would support this activity

5 0
3 years ago
Current cost to source from the home plant to Country A is $0.55 per unit, plus $0.02 in shipping (there is no tariff). If produ
Marianna [84]

Answer:

Cost savings in sourcing from Country A = $0.5 million ($57.5 - $57 million)

Explanation:

Sourcing from Country A:

Purchase price = $0.55 per unit

Shipping = $0.02

Total Cost = $0.57

Cost of 100 million units = $57 million

Sourcing from Country B:

Purchasing price = $0.44 ($0.55 x 80%)

Shipping = $0.06

CIF Tariff = 15% = $0.075  ($0.5 x 15%)

Total Cost = $0.575

Cost of 100 million units = $57.5 million

Sourcing from Country A is more beneficial than sourcing from Country B with reduced product cost, but increased shipping and additional tariff.  Whereas Country A gives a total cost for 100 million units of $57 million, sourcing the same units from Country B gives a total cost of $57.5 million.  The savings of $0.5 million is substantial that no company would like to lose unless the goods from Country B are of higher quality than those from Country A.

7 0
3 years ago
Other questions:
  • Bricktown Exchange purchases a copyright for $50,000. The copyright has a remaining legal life of 25 years, but only an expected
    14·1 answer
  • Which of the following is not a factor of production?
    12·1 answer
  • Mueller Company sold merchandise costing $120,000 for $240,000. Mueller estimates that merchandise costing $5,000 will be return
    12·1 answer
  • If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold.
    9·1 answer
  • The authors describe "writing programs" as:
    5·1 answer
  • The _____ prohibits the transfer of personal data to non-European Union nations that do not meet the European adequacy standard
    15·1 answer
  • All of the following statements about flexible spending accounts (FSAs) are TRUE, EXCEPT:
    9·1 answer
  • Your bank card has an APR of 18% and there is a 2% fee for cash advances. The bank starts charging interest on cash advances imm
    13·1 answer
  • Nuclear Inc. just paid a $2.75 dividend. Dividends are expected to grow by 30% in year 1, by 25% in year 2, and by 25% in year 3
    11·1 answer
  • The basis of strategic position through serving few needs of many customers is known as:_____.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!