Reference no: EM132891175

Problem 1: Contract costs recognized as asset are

a. amortized in a manner that is consistent with the recognition of the related revenue.

b. deferred and amortized using the straight-line method.

c. depreciated over the estimated useful life of the asset.

d. expensed immediately when incurred.

Problem 2: If at contract inception the collectability of the promised consideration is significantly uncertain,

a. no revenue is recognized from the contract, and any amount received is recognized as liability.

b. revenue from the contract is recognized using the "installment method."

c. the accrual method is disregarded and revenue is recognized only when cash collections exceed the costs incurred.

d. any of these as a matter of accounting policy choice

Problem 3: If in a subsequent period the collectability of the consideration in a franchise contract becomes doubtful but not significantly uncertain, the entity shall

a. discontinue recognizing further revenue.

b. assess any existing receivable or contract asset from the franchise contract for impairment.

c. shift to the installment method or the cost recovery method of revenue recognition.

d. discontinue recognizing further revenue until the collections exceed the contract costs.