Answer:
B: $1,500 is recognized this year, $ 9,000 next year and $ 7,500 in last year of contract.
Explanation:
Steven has adopted the accrual method in recording its revenue.
Accrual is an accounting concept which means expenses and revenues are recorded by a business when they are incurred not when cash is received or paid.
Accrual basis of accounting gives more accurate and true results as compare to cash basis accounting.
The payment received in September of $ 18,000 was the income for 24 months so it was wrong to record the whole amount as an income in September.
In the first year 2 months of income is recorded for November and December ($ 18,000÷24 = $750 per month) $750 × 2 = $1500.
In the second year 12 months revenue will be recognized ($750 per month × 12 = $ 9,000)
In the last year 10 month remained out of 24 months so the income recognized was ( $750 × 10 = $ 7,500)
Answer:
Inventory, End (A): $1,800. Inventory, End (B): $2,500.
Explanation:
Accountants conservatively recognize ending inventory at lower of cost or market value in the balance sheet. Upon purchase of inventory, this is recorded at cost. However, if it loses its value, FASB Accounting Standards Update requires recognition of the inventory at its net realizable value. Thus, Iris Company should recognize its ending inventory of Item A at $1,800 (100 units x $18) and Item B at $2,800 (50 units x $50).
Answer:
A) Valuable assets such as the company's reputation, the quality of its work force, and the strength of its management are not captured on the balance sheet.
Explanation:
As we know that the balance sheet records the assets, liabilities and the equity of the company. Now the main problem with the balance sheet is that the valuable assets such as reputation of the company, work force quality, management strength would not captured here as it only records the monetary transactions.
Therefore the correct option is a.
Answer:
- Divorce after 2020 = Alimony is $0
- Divorce before 2020 = Alimony is $12,000
Explanation:
If the divorce occurred before 2020 then the spouse paying the alimony can deduct it from their taxes and the person receiving it has to include it in their income. If the divorce of Jake and his spouse was before 2020, he will be able to include the full $12,000 as a deduction.
In 2020, new regulation came into effect that meant that couples divorcing from thence will not be able to deduct alimony so Jake's deduction would be $0 if they divorced in 2020 and onwards.
Answer:
Original cost of the stock = $23.16
Explanation:
Original cost of the stock = Selling price of stock / ( 1 + r )^n
Original cost of the stock = $50 / (1+8%)^10
Original cost of the stock = $50 / (1.08)^10
Original cost of the stock = $23.16