Distribute it in proportion to all contract obligations According to the US GAAP method of revenue recording, an entity would enter the recorded progress reports: A company sends 14,000 units of its product to a customer on December 27 of year 3. The buyer has the right to return any goods within 90 days for a full refund. Which of the following measures would require the company to recognize the sale of goods in year 4 and not in year 3? When a company uses the US GAAP completed contract method, the turnover is recorded when the order is completed. The Corporation will recognize a gain equal to the difference between the carrying amount of the abandoned asset (purchase price of $550,000 – accumulated amortization of $270,000 = $280,000) and the fair value of the abandoned asset of $310,000. 310,000 USD – 280,000 USD = profit of 30,000 USD. Note that only 3.2% of this profit would actually be recognized ($10,000 in cash/total consideration of $310,000). Assign it to the commitment with the highest standalone price to the equipment will be purchased by ABC Company for $550,000 on January 1, year 1. After 3 years, a depreciation of $270,000 was recorded. At this point, the asset has a fair market value of $310,000 and is exchanged for a similar asset with a fair market value of $300,000.
ABC also gets $10,000 in the exchange. What profit should ABC make as a result of this transaction? Any discount in a contract should be distributed proportionately among all the obligations of the contract. Martino Corporation, in order to increase its revenue, begins to sell goods with an automatic right of return within six months if they are not fully satisfied. On November 1, goods valued at $35,000 will be sold for $22,000. Company representatives expect 15% of the goods sold to be returned before the expiration date of the following year. What gross profit should be made from this sale in the current year? If the total consideration for a contract with multiple embedded obligations reflects a discount, the best way to allocate that discount is to recognize revenue when it is earned period by period. On a cash basis, revenue is recognized when cash is received. Bloom`s Gift Shop, a retail store, sold gift cards that can be redeemed for merchandise. The 1. On October 2, the year, a customer purchases gift cards worth $1,000 at the Bloom Gift Shop. Gift certificates expire 1 year after the date of purchase.
Which of the following points is correct?. When gift cards are purchased, the company credits the deferred profits. When gift cards are redeemed, the Company charges the deferred profits for the amount exchanged and the proceeds of the credit. On 31 December, year 2, revenues for November and December should be recorded. . The Company can reasonably estimate that 15% of the Goods will be returned Since the Company can reasonably estimate that 15% of the Goods will be returned, it should record a value adjustment and therefore record only 85% of its gross profit from such sales (100% – 15%). The final PM should therefore be $13,000 ($35,000 in revenue – $22,000 in expenses) x 85%. Reduce the smallest commitment to the total amount of the rebate None of these scenarios would require the company to postpone the recognition of the sale to year 4.
On October 31, Year 2, Bloom is expected to record a deferred income credit of $1,000. .