1.
Question :
Transaction price for multiple performance obligations should be
allocated
Student Answer: based on selling price from the company’s competitors.
based on what the company could sell the goods for on a
standalone basis.
based on forecasted cost of satisfying performance
obligation.
based on total transaction price less residual value.
Points Received: 2 of 2
Comments:
-703637150 MultipleChoice 15 True
0 -703637150 MultipleChoice 15
Question Questio
2. n: Gomez, Inc. began work in 2014 on contract #3814, which provided for
a contract price of $14,400,000. Other details follow:
2014
2015
Costs incurred during the year $2,400,000
$7,350,000
Estimated costs to complete, as of December 31 7,200,000
0
Billings during the year 2,700,000
10,800,000
Collections during the year 1,800,000
11,700,000
Assume that Gomez uses the percentage-of-completion method of
accounting. The portion of the total gross profit to be recognized as
income in 2014 is
Student Answer: $900,000.
$1,200,000.
$3,600,000.
$4,800,000.
Points Received: 0 of 2
Comments:
-703637149 MultipleChoice 42 False
0 -703637149 MultipleChoice 42
Question Questio
3. n: Horner Construction Co. uses the percentage-of-completion method. In
2014, Horner began work on a contract for $16,500,000; it was
completed in 2015. The following cost data pertain to this contract:
Year Ended
December 31
2014
2015
Cost incurred during the year
$5,850,000 $4,200,000
Estimated costs to complete at the end of year
3,900,000 —
The amount of gross profit to be recognized on the income statement for
the year ended December 31, 2015 is
Student Answer: $2,400,000.
$2,580,000.
$2,700,000.
$6,450,000.
Points Received: 2 of 2
Comments:
-703637148 MultipleChoice 44 True
0 -703637148 MultipleChoice 44
Question 4 Question :
. Eilert Construction Company had a contract starting April 2015,
to construct a $21,000,000 building that is expected to be
completed in September 2016, at an estimated cost of
$19,250,000. At the end of 2015, the costs to date were
$8,855,000 and the estimated total costs to complete had not
changed. The progress billings during 2015 were $4,200,000 and
the cash collected during 2015 was $2,800,000. Eilert uses the
percentage-of-completion method.
At December 31, 2015, Eilert would report Construction in
Process in the amount of
Student Answer: $9,660,000.
$8,855,000.
$8,260,000.
$805,000.
Points Received: 0 of 2
Comments:
-703637147 MultipleChoice 47 False
0 -703637147 MultipleChoice 47
Question 5 Question :
. Under the completed-contract method
Student Answer: revenue, cost, and gross profit are recognized during the
production cycle.
revenue and cost are recognized during the production cycle,
but gross profit recognition is deferred until the contract is
completed.
revenue, cost, and gross profit are recognized at the time the
contract is completed.
None of these answers are correct.
Points Received: 0 of 2
Comments:
-703637146 MultipleChoice 26 False
0 -703637146 MultipleChoice 26
Question 6 Question :
. Noncash consideration should be
Student Answer: recognized on the basis of fair value of what is given up.
recognized on the basis of original cost paid by customer.
recognized on the basis of fair value of what is received.
recognized on the basis of fair value of equivalent goods or
services.
Points Received: 0 of 2
Comments:
-703637145 MultipleChoice 13 False
0 -703637145 MultipleChoice 13
Question Questio
7. n: During 2014, Gates Corp. started a construction job with a total contract
price of $14,000,000. The job was completed on December 15, 2015.
Additional data are as follows:
2014
2015
Actual costs incurred during the year $5,400,000
$6,100,000
Estimated remaining costs 5,400,000
—
Billed to customer 4,800,000
9,200,000
Received from customer 4,000,000
9,600,000
Under the completed-contract method, what amount should Gates
recognize as gross profit for 2015?
Student Answer: $900,000
$1,250,000
$1,900,000
$2,500,000
Points Received: 2 of 2
Comments:
-703637144 MultipleChoice 50 True
0 -703637144 MultipleChoice 50
Question 8 Question :
. The principal advantage of the completed-contract method is that
Student Answer: reported revenue is based on final results rather than
estimates of unperformed work.
it reflects current performance when the period of a contract
extends into more than one accounting period.
it is not necessary to recognize revenue at the point of sale.
a greater amount of gross profit and net income is reported
than is the case when the percentage-of-completion method is
used.
Points Received: 2 of 2
Comments:
-703637143 MultipleChoice 25 True
0 -703637143 MultipleChoice 25
Question 9 Question :
. Signing of the contract by the two parties is
Student Answer: not recorded until one or both parties perform under the
contract.
recorded at the time the contract is approved by both parties.
not recorded until both parties perform under the contract.
recorded immediately after the contract is signed.
Points Received: 0 of 2
Comments:
-703637142 MultipleChoice 7 False
0 -703637142 MultipleChoice 7
Question 10 Question :
. Seasons Construction is constructing an office building under
contract for Cannon Company. The contract calls for progress
billings and payments of $1,240,000 each quarter. The total
contract price is $14,880,000 and Seasons estimates total costs of
$14,200,000. Seasons estimates that the building will take 3 years
to complete, and commences construction on January 2, 2014.
Seasons Construction completes the remaining 25% of the
building construction on December 31, 2016, as scheduled. At
that time the total costs of construction are $15,000,000. What is
the total amount of Revenue from Long-Term Contracts and
Construction Expenses that Seasons will recognize for the year
ended December 31, 2016?
Revenue Expenses
Student Answer: $14,880,000 $15,000,000
$3,720,000 $3,750,000
$3,720,000 $4,200,000
$3,750,000 $3,750,000
Points Received: 2 of 2
Comments:
-703637141 MultipleChoice 36 True
0 -703637141 MultipleChoice 36
Question 11. Question :
When a contract modification does not result in a separate
performance obligation, the additional products are priced at the
Student Answer: standalone price of the product.
blended price of original contract and contract modification.
average selling price of original selling price and standalone
price.
selling price specified in contract modification
Points Received: 0 of 2
Comments:
-703637140 MultipleChoice 9 False
0 -703637140 MultipleChoice 9
Question 12 Question :
. Cooper Construction Company had a contract starting April 2015,
to construct a $18,000,000 building that is expected to be
completed in September 2017, at an estimated cost of
$16,500,000. At the end of 2015, the costs to date were
$7,590,000 and the estimated total costs to complete had not
changed. The progress billings during 2015 were $3,600,000 and
the cash collected during 2015 was 2,400,000.
For the year ended December 31, 2015, Cooper would recognize
gross profit on the building of:
Student Answer: $632,500
$690,000
$810,000
$0
Points Received: 2 of 2
Comments:
-703637139 MultipleChoice 37 True
0 -703637139 MultipleChoice 37
Question 13 Question :
. The third step in the process for revenue recognition is to
Student Answer: determine the transaction price.
identify the separate performance obligations in the contract.
allocate transaction price to the separate performance
obligations.
recognize revenue when each performance obligation is
satisfied.
Points Received: 2 of 2
Comments:
-703637138 MultipleChoice 4 True
0 -703637138 MultipleChoice 4
Question 14 Question :
. The fourth step in the process for revenue recognition is to
Student Answer: recognize revenue when each performance obligation is
satisfied.
identify the separate performance obligations in the contract.
allocate transaction price to the separate performance
obligations.
determine the transaction price.
Points Received: 2 of 2
Comments:
-703637137 MultipleChoice 5 True
0 -703637137 MultipleChoice 5
Question 15 Question :
. Consigned goods are recognized as revenues by the
Student Answer: consignor when a sale to a third party has occurred.
consignor when the merchandise has been shipped to a
consignee.
consignee when a sale to a third party has occurred.
consignor when it receives payment from consignee for
goods sold.
Points Received: 0 of 2
Comments:
-703637136 MultipleChoice 23 False
0 -703637136 MultipleChoice 23
Question 16 Question :
. When sales are made with a right of return, the company
Student Answer: should not recognize any revenue.
should recognize revenue for the full sales price.
records the returned asset in a separate inventory account.
record the estimated returns in the Sales Returns account.
Points Received: 0 of 2
Comments:
-703637135 MultipleChoice 18 False
0 -703637135 MultipleChoice 18
Question 17 Question :
. Meyer & Smith is a full-service technology company. They
provide equipment, installation services as well as training.
Customers can purchase any product or service separately or as a
bundled package. Container Corporation purchased computer
equipment, installation and training for a total cost of $120,000
on March 15, 2014. Estimated standalone fair values of the
equipment, installation and training are $75,000, $50,000 and
$25,000 respectively. The journal entry to record the transaction
on March 15, 2014 will include a
Student Answer: credit to sales revenue for $120,000.
debit to unearned service revenue of $25,000.
credit to unearned service revenue of $20,000.
credit to service revenue of $50,000.
Points Received: 2 of 2
Comments:
-703637134 MultipleChoice 30 True
0 -703637134 MultipleChoice 30
Question 18 Question :
. The transaction price
Student Answer: excludes discounts, volume rebates, coupons and free
products, or services.
is the amount of consideration that a company expects to
receive from a customer
excludes time value of money if the contract involves a
significant financing component.
does not consider noncash consideration such as donations,
gifts, equipment or labor.
Points Received: 2 of 2
Comments:
-703637133 MultipleChoice 12 True
0 -703637133 MultipleChoice 12
Question 19 Question :
. P & G Auto Parts sells parts to AAA Car Repair during 2014.
P&G offers rebates of 2% on purchases up to $30,000 and 3% on
purchases above $30,000 if the customer’s purchases for the year
exceed $100,000. In the past, AAA normally purchases $150,000
in parts during a calendar year. On March 25, 2014, AAA Car
Repair purchased $37,000 of parts. The journal entry to record
the purchase includes a
Student Answer: debit to Accounts Receivable for $37,000.
debit to Accounts Receivable for $36,400.
credit to Sales Revenue for $36,190.
credit to Sales Revenue for $36,400.
Points Received: 0 of 2
Comments:
-703637132 MultipleChoice 28 False
0 -703637132 MultipleChoice 28
Question 20 Question :
. On January 15, 2014, Bella Vista Company enters into a contract
to build custom equipment for ABC Carpet Company. The
contract specified a delivery date of March 1. The equipment was
not delivered until March 31. The contract required full payment
of $75,000 30 days after delivery. This contract should be
Student Answer: recorded on January 15, 2014.
recorded on March 1, 2014.
recorded on March 31, 2014.
recorded on April 30, 2014.
Points Received: 2 of 2
Comments:
-703637131 MultipleChoice 8 True
0 -703637131 MultipleChoice 8
Question 21 Questio
. n: Bruner Constructors, Inc. has consistently used the percentage-of-
completion method of recognizing income. In 2014, Bruner started
work on a $42,000,000 construction contract that was completed in
2015. The following information was taken from Bruner's 2014
accounting records:
Progress billings
$13,200,000
Costs incurred
12,600,000
Collections
8,400,000
Estimated costs to complete
25,200,000
What amount of gross profit should Bruner have recognized in 2014
on this contract?
Student Answer: $4,200,000
$2,800,000
$2,100,000
$1,400,000
Points Received: 2 of 2
Comments:
-703637130 MultipleChoice 49 True
0 -703637130 MultipleChoice 49
Question 22 Question :
. The second step in the process for revenue recognition is to
Student Answer: allocate transaction price to the separate performance
obligations.
determine the transaction price.
identify the contract with customers.
identify the separate performance obligations in the contract.
Points Received: 2 of 2
Comments:
-703637129 MultipleChoice 3 True
0 -703637129 MultipleChoice 3
Question 23 Question :
. Cost estimates at the end of the second year indicate that a loss
will result on completion of the entire contract. Which of the
following statements is correct?
Student Answer: Under the completed-contract method, the loss is not
recognized until the year the construction is completed.
Under the percentage-of-completion method, the gross profit
recognized in the first year must not be changed.
Under the completed-contract method, when the billings
exceed the accumulated costs, the amount of the estimated loss is
reported as a current liability.
Under the completed-contract method, when the Construction
in Process balance exceeds the billings, the estimated loss is
added to the accumulated costs.
Points Received: 2 of 2
Comments:
-703637128 MultipleChoice 27 True
0 -703637128 MultipleChoice 27
Question 24 Question :
. When a customer purchases a product but is not yet ready for
delivery, this is referred to as
Student Answer: a repurchase agreement.
a consignment.
a principal-agent relationship.
a bill-and-hold arrangement
Points Received: 2 of 2
Comments:
-703637127 MultipleChoice 19 True
0 -703637127 MultipleChoice 19
Question 25 Question :
. The cost-to-cost basis measures progress towards completion by
Student Answer: comparing costs incurred to date with total costs to complete
the contract.
tracking results of work completed to date; it is an output
measure.
tracking floors of a building completed versus floors still to
be completed.
tracking miles of a highway completed versus miles of
highway still to be completed.
Points Received: 2 of 2
