F2-M1 Rev Rec Flashcards
For a customer who pays the annual fee in advance, Rawl should recognized the related revenue under US GAAP:
Evenly over the contract year as the services are performed.
Which of the following is a condition that must be present in order for the contract modification to be accounted for as a separate contract?
The scope of the original contract increases through the addition of distinct goods or services.
A contract contains multiple service-related performance obligations. All of the following criteria below will lead to the treatment of each service as a distinct obligation except:
The services are all similar in nature and provided in the same manner.
Which of the following statements is correct regarding deferred revenues recorded by a company that provides services to customers?
Deferred revenue is a liability until the service has been performed.
When the total consideration for a contract with multiple embedded obligations reflects a discount, the most appropriate way to assign that discount is to:
Allocate it proportionally to all obligations within the contract
Collections received for service contracts should be recorded as an increase in an:
Unearned service revenue account
Do the following increase when a service contracts are sold?
Deferred Rev Service Revenue
Yes No
If the company would like to use an OUTPUT METHOD to recognize revenue during the first year of the contract, which of the following methods would be most appropriate?
Contract to produce and deliver 500k webcams over next 20mos.
Milestones achieved
Which of the following situations would require that the seller recognize revenue over time rather than at a point in time?
Benefits are received by the buyer as the seller performs.
In this case, the company should recognize revenue for the sale when the order is:
Customer ordered large order, has no immediate need for product, so asked Co. to wait 60 days before delivering the products.
Delivered to the customer
