Ch 18 Appen. + IFRS Insights

Question 0

Service sponsor retailer industries

Answer 0

Ice cream, restaurants, motels, fast food, auto rental

Question 1

4 types of franchising arrangements

Answer 1

1 manufacturer- retailer
2 manufacturer-wholesaler
3 service-sponsor retailer
4 wholesaler retailer

Question 2

Franchisor, franchisee

Answer 2

Franchisor- party grants business rights under franchise

Franchisee- party operates franchised business

Question 3

Initial Franchise fee

Answer 3

Payment for establishing franchise relationship and

Providing some initial service

Question 4

Substantial performance

Answer 4

Occurs when Franchisor has no remaining obligation to

Refund cash received or excuse of any nonpayment of note

Question 5

Continuing franchise fees

Answer 5

Received in return for continuing rights granted by franchise
Agreement

Providing management training, advertising and promoting,
Legal assistance, other support

Question 6

Bargain purchases

Answer 6

Equipment and supplies purchased at bargain because

Franchisee paid franchise fee

Question 7

A franchise agreement may give Franchisor and option to purchase…

Answer 7

The franchisee’s business

Question 8

3 Similarities IFRS VS GAAP: revenue recognition

Answer 8

1 fraud is major issue For both systems

2 same term point of sale

3 both recognize loss immediately under unprofitable long
term contracts

Question 9

IFRS VS GAAP revenues and gains

Answer 9

GAAP classifies gains separate from revenues

IFRS defines revenue to include both revenues and gains

Question 10

IFRS VS GAAP: basic standards of revenue recognition

Answer 10

IFRS only has 1 basic standard of revenue recognition

GAAP has over 100 standards

Question 11

IFRS VS GAAP: accounting for revenue

Answer 11

IFRS is principles based

GAAP is rules based

Question 12

IFRS VS GAAP: revenue recognition principle

Answer 12

IFRS revenue recognition principle based on probability
Of economic benefits

GAAP uses concepts such as realized, realizable and earned
For revenue recognition

Question 13

IFRS VS GAAP: revenue measurement

Answer 13

IFRS revenue is measured at fair value of consideration
received

GAAP revenue is measured at fair value given up or
Received, whichever is clearer

Question 14

IFRS VA GAAP: long term construction contracts

Answer 14

IFRS prohibits completed contract method of accounting
For long term construction contracts, companies must
Use percentage of completion method

GAAP allows both