Assuming thomas uses a probability weighted transaction

Assignment Help Financial Accounting
Reference no: EM13883010

1.Thomas Consultants provided Bran Construction with assistance with implementing various cost  savings initiatives.Thomas' contract specifies that it will receive a flat rate of $50,000 and an additional $20,000 if Bran reaches a prespecified target amount of cost savings. Thomas estimates that there is a 20% chance that Bran will achieve the cost  savings target.

Required:
1. Assuming Thomas uses a probability  weighted transaction price, calculate the amount of the transaction price.
2. Assuming Thomas uses the most likely value as the transaction price, calculate the amount of the transaction price.
3. Assuming Thomas is trying to apply the revenue recognition rules most appropriately, do you think the company is more likely to use the probability  weighted amount or the most likely value? Briefly explain your answer.
4. Assume that Thomas provides a plan for Bran, but Bran is responsible for implementing it. Also assume that Thomas delivers the plan in the first quarter of the year, but Bran will be implementing the plan and determining total cost savings over the entire year. Should Thomas recognize the entire transaction price when it delivers the plan? Briefly explain your reasoning.

Reference no: EM13883010

Questions Cloud

Biotechnology company called healthpro and promises : Pfizer , a large research  based pharmaceutical company, enters into a contract with a start  up biotechnology company called HealthPro and promises:
Explain the networking features : Explains the networking features , different kinds of networks and also how they are arranged,Describe what is Networking and also explain the types of networks
Basic interest rate swap and futures positions : Suppose that you buy an interest rate cap on three month LIBOR with a two year maturity and simultaneously sell a floor on three month LIBOR with a two year maturity. Ignore the premiums. Draw a profit diagram that indicates when you will gain and lo..
What is the cash conversion cycle for ridge company? : What is the cash conversion cycle for Ridge Company?
Assuming thomas uses a probability weighted transaction : 1. Assuming Thomas uses a probability  weighted transaction price, calculate the amount of the transaction price.
Would a collar or reverse collar serve as a better hedge : Your bank is asset sensitive, and management wants to protect against loss from interest rate changes. a. Would an interest rate cap or floor serve as a better hedge? Explain. b. Would a collar or reverse collar serve as a better hedge? Explain. c. W..
Develop a thesis statement in the opening paragraph : Develop a thesis statement in the opening paragraph. The thesis statement should indicate the subject and the assertion to be made about the subject in the composition
Prepare the journal entry to record the first fixed payment : 1.On January 1, Seneca Asset Management enters into a contract with a client to provide fund management services for one year.
The entire operations of a large organization : Reflect back to the material covered in the chapters. You are a production manager in charge of the entire operations of a large organization.  You have a crew of 300 employees that report to you.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Question 1 the building authority was prepared by the city

question 1. the building authority was prepared by the city and organized as a separate legal entity. the authority is

  Evaluate budgeted production during the month

Below is budgeted production and sales information for Fleming Inc. for December. Evaluate Budgeted production during the month

  Effect of stock split

Gino's Restaurant Corporation wholesales ovens and ranges to restaurants throughout the Midwest. Gino's Restaurant Corporation, which had 51,000 shares of common stock outstanding, declared a 3-for-1 stock split. What will be the number of shares out..

  What will be the price at which the bond is issued

What is the funded status of this plan? What will be the price at which the bond is issued? What periodic interest payment does Kirner make?

  Preparing multi-step amp single-step income statements by

preparing multi-step amp single-step income statements by finding out sales amp cost of goods figures.bizkid companys

  Required to prepare the clubs

Bar Trading Account for the year ended and income and Expenditure Account for the year ended 31 December 2008 and a Balance Sheet as at that date - Required to prepare the Club's - Bar Trading Account for the year ended 31 December 2008.

  Accounts receivable and allowance for doubtful accounts

If $2,000 is determined to be specifically uncollectible, what effect will the write-off of the specific receivable have on: accounts receivable and allowance for doubtful accounts?

  Calculate the degree of operating leverage

Calculate the degree of operating leverage given the following information: sales of $25,000; variable costs $13,000 and operating income of $7,000 for year one, and sales of $40,000; variable costs of $15,000; and operating income of $16,000 for yea..

  Compute the free cash flow for your company

Compute the return on assets, profit margin and asset utilization rate for your company and its competitor.

  Compute the flexible budget variance for garcia and buffet

Garcia and Buffet, a local CPA firm, has budgeted $100,000 in fixed expenses per month for the tax department. It has also budgeted variable costs of $5 per tax return prepared for supplies, $35 per return for labor, and $10 per return for computer t..

  Unit of product using activity-based costing

Assume that a pet food manufacturer s considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 1/2 pound cans. How much overhead cost will be ..

  Purpose journal entries to account for the foreign currency

Purpose journal entries to account for the foreign currency option, import purchase and firm commitment.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd