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vivado [14]
3 years ago
13

Rothbart Manufacturing agrees to manufacture bumper cars for 12 Banners Amusement Parks. Under the terms of the contract, 12 Ban

ners will pay Rothbart a total of $60,000, and 12 Banners can cancel the contract if it so chooses but must pay Rothbart for work completed. Rothbart believes that, if 12 Banners cancelled the contract, Rothbart could sell the bumper cars to another amusement park and still make a profit. The manufacturing contract is expected to last six months, and as of December 31, 2016, the job is 80% complete. How much revenue should Rothbart recognize in 2016 for this contract
Business
1 answer:
Norma-Jean [14]3 years ago
5 0

Answer:

Rothbart Manufacturing

From the case study, Rothbart Manufacturing has incurred an equivalent cost of 80% in the manufacture of the bumper cars, it should then recognize revenue of $48,000 ($60,000 * 80%) under the percentage of completion method.

However, under the new IFRS 15 or ASC 606 Revenue from Contracts with Customers, Rothbart Manufacturing can only recognize revenue based on the fulfillment of the contract's performance obligations, evidenced by the transfer of the asset or some benefits to the buyer.

I do not see any transfer of benefits here.  Instead of recognizing any revenue the current year, Rothbart Manufacturing should assign the cost incurred so far (80%) to Work in Process Inventory, which is a current asset.  It can then recognize revenue when the bumper cars are sold.

Explanation:

The International Financial Reporting Standard (IFRS) 15 specifies when revenue from contracts with customers should be recognized.  This standard is equivalent to the US Accounting Standard Code 606.

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4 0
3 years ago
Sheridan Company declared a $229000 cash dividend. It currently has 12300 shares of 4%, $100 par value cumulative preferred stoc
dem82 [27]

Answer and Explanation:

The computation is shown below:

For preferred shareholders

The dividend is

= 12,300 shares × 4% × $100

= $49,200

For two years, it would be

= $49,200 × 2

= $98,400

And, the total cash dividend declared is $229,000

So, the cash distribute to common stockholder is

= $229,000 - $98,400

= $130,600

hence, the cash distribute to common stockholder is $130,600

5 0
3 years ago
If fixed costs are $1,464,000, the unit selling price is $220, and the unit variable costs are $114, what are the break-even sal
77julia77 [94]

Answer:

d.14,249 units

Explanation:

Break-even sales (units) = Fixed Costs ÷ Contribution per unit

Where,

Contribution per unit = Unit Selling Price - Unit Variable Cost

                                   = $106

therefore,

Break-even sales (units) = ($1,464,000 + $46,400) ÷ $106

                                        = 14,249

thus,

the break-even sales (units) if fixed costs are increased by $46,400 is 14,249 units.

4 0
3 years ago
Your sister just deposited $14,000 into an investment account. She believes that she will earn an annual return of 10.5 percent
Ilia_Sergeevich [38]

Answer:

You must deposit $14,824.07

Explanation:

Giving the following information:

Sister:

Investment= $14,000

Interest rate= 10.5%

Number of years= 9

You:

Investment=?

Interest rate= 9.8%

Number of years= 9

First, we need to calculate the future value of your sister:

FV= PV*(1+i)^n

FV= 14,000*(1.105^9)= $34,386.55

Now, we can determine your deposit:

PV= FV/(1+i)^n

PV= 34,386.55/ (1.098^9)= $14,824.07

3 0
3 years ago
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