Describe when revenue should be recognized by each company

Assignment Help Finance Basics
Reference no: EM13574775

The following are brief descriptions of several companies in different lines of business.

A. Company A is a construction company. It has recently signed a contract to build a highway over a three-year period. A down payment was collected; the remaining collections will occur periodically over the construction period based upon the degree of completion.

B. Company B is a retailer. It makes sales on a daily basis for cash and on credit cards.

C. Company C is a health spa. It has recently signed contracts with numerous individuals to use its facilities over a two-year period. The contract price was collected in advance.

D. Company D is a land development company. It has recently begun developing a ?oretirement community?? and has sold lots to senior citizens. The sales contract requires a small down payment and periodic payments until completion of the roads and a clubhouse, after which the remainder of the purchase price is due. Prior to this point, a purchaser may cancel the contract and receive a refund of all payments.

Required

Describe when revenue should be recognized by each company. If revenue should not be recognized at the time of sale, indicate what method should be used to recognize the revenue. Justify your decision.

Reference no: EM13574775

Questions Cloud

The general ledger account for accounts receivable shows a : the general ledger account for accounts receivable shows a debit balance of 40000. the allowance for uncollectible
Income statements for sennett company for 2008 and 2009 : income statements for sennett company for 2008 and 2009 follow.20092008sales12100092000cost of goods
On december 31 2012 hampton declared the annual preferred : hampton corporations balance sheet at december 31 2011 is presented below. hampton corporation balance sheet december
On december 1 2011 umd company purchased 15000 of : on december 1 2011 umd company purchased 15000 of equipment by issuing a 120-day 10 note payable to bank of maryland.
Describe when revenue should be recognized by each company : the following are brief descriptions of several companies in different lines of business.a. company a is a
For 2008 orchard corporation reported after-tax net income : for 2008 orchard corporation reported after-tax net income of 5800000. during the year the number of shares of stock
Provide a draft sexual harassment policy that is in : you are a captain in charge of operations within your police department. as part of your responsibilities you supervise
Revenue and expense data for martinez company are as : revenue and expense data for martinez company are as follows 2012 2011 administrative expenses 37000 20000 cost of
On september 1 2011 donna equipment signed a one-year 8 : on september 1 2011 donna equipment signed a one-year 8 interest bearing note payable for 50000. assuming donna

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the effective rate of interest

Koopman's Chickens, Inc. plans to borrow $275,000 from its bank for one year. The rate of interest is 9 percent, but a compensating balance of 20 percent is required. What is the effective rate of interest?

  Assume that five years later the inflation premium is only

tom cruise lines inc. issued bonds five years ago at 1000 per bond. these bonds had a 25-year life when issued and the

  Calculate the required rate of return for management inc

calculate the required rate of return for management inc. assuming that investors expect a 5 rate of inflation in the

  What is a reasonable price for a share of rah stock

RAH Inc. is not public ally traded, but the P/E ratios of its 4 closest competitors are 15, 15,3,15,7', and 16.5. RAH's current earnings per share are $ 1.50. They are expected to grow at 6% for the next few years. What is a reasonable price for a..

  What is the undiscounted cash flow in the final year

What is the undiscounted cash flow in the final year of an investment, assuming $10,000 after-tax cash flows from operations, $1,000 from the sale of a fully depreciated machine, $2,000 required in additional working capital, and a 35% tax rate? P..

  What was the addition to net working capital

If net fixed assets increased by $25,000 during the year, what was the addition to net working capital?

  Write disadvantages of international accounting uniformity

Some financial statement users maintain that despite its intrinsic intellectual appeal. Discuss at least three disadvantages of national or international accounting uniformity.

  Calculate the real rate of return on the stock

You purchased 1,000 shares of stock for $23 per share exactly one year ago. During the year, the stock paid a $.50 dividend per share and the current stock price is $20 per share. The inflation rate the last year was 2%.

  How many pounds of apples should rae purchase

What is the cost in dollars for the required January purchase of apples?

  Calculation of budgeted department cost and production unit

Calculation of budgeted department cost, production unit, direct material purchase cost & direct labour cost

  Traks direct foreign investment

Show how would this affect Trak's direct foreign investment

  What will your interest payments be next year

You have just purchased a 10-year TIPS with face value $1,000 and a 4% coupon rate. Inflation for the year turns out to be 6%. What will your interest payments be next year? Show work and explain.

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