Exam (elaborations)
Intermediate Accounting Exam 2 Review with 100% Verified Answers| Verified & Updated
- Course
- Institution
Intermediate Accounting Exam 2 Review with 100% Verified Answers| Verified & Updated
[Show more]
Content preview
Intermediate Accounting Exam 2 Review with 100%Verified Answers| Verified & Updated
On January 1st, Guarder Consulting enters into a one-year contract with Smith Co. to restructure
some of Smith's processes with a goal of cost savings. Smith pays Guarder an up-front fixed fee
of $48,000 on January 1st. Guarder will also earn an additional $12,000 bonus if Smith achieves
$100,000 of cost savings. Guarder estimates a 70% chance that Smith will achieve $100,000 of
cost savings. What journal entry will Guarder make on January 1st to recognize the up-front cash
payment? - ✔✔Cash 48,000
Deferred revenue 48,000
At the end of the period, if construction in progress exceeds billings on construction contracts,
it is recorded as a(n)
-contract asset.
-expense.
-revenue.
-contract liability. - ✔✔-contract asset.
Adjust revenue for the previously recognized bonus
Record a valuation allowance against the bonus receivable.
For the remainder of the contract, only recognize revenue related to the fixed fee.
-Adjust revenue for the previously recognized bonus
-Record a valuation allowance against the bonus receivable.
,-For the remainder of the contract, only recognize revenue related to the fixed fee.
-Reverse the bonus receivable - ✔✔-Adjust revenue for the previously recognized
bonus -For the remainder of the contract, only recognize revenue related to the fixed fee.
-Reverse the bonus receivable
If a contract specifies prepayment before delivery, the customer is essentially making a
______________ to the seller and, therefore, is getting compensation for the time value of
money. - ✔✔Loan
Which of the following can be used as indicators of progress toward completion under the
input method? (Select all that apply.)
-number of units produced to date
-achievement of milestones
-costs incurred
-machine hours used
-labor hours expended - ✔✔-costs incurred
,-machine hours used
-labor hours expended
For a consignment sale, when is inventory reduced for the cost of the item by the consignor?
-When shipped to the consignee.
-When sold by the consignee.
-When received by the consignee.
-When the consignment agreement is signed. - ✔✔When sold by the consignee.
Under the gross method, the initial recording of sales revenue will be ______ the amount
recorded under the net method.
-equal to
-higher than
-lower than - ✔✔-higher than
Which of the following conditions or situations make the timing of revenue recognition for
long-term contracts especially critical? (Select all that apply.)
-In most cases, the project is of little value until completed.
-There tends to be a considerable difference between recognition over time and when the
performance obligation is completed.
, -Delayed recognition doesn't provide information to financial statement users in a timely manner.
- ✔✔-There tends to be a considerable difference between recognition over time and when the
performance obligation is completed.
-Delayed recognition doesn't provide information to financial statement users in a timely manner.
Failing to estimate sales returns can result in income being _______ in the period the sale is
made and _______ in the period the product is returned.
-overstated; understated
-understated; overstated
-overstated; overstated
-understated; understated - ✔✔-overstated; understated
Related to long-term construction contracts, at the end of the period which accounts are netted?
-Construction in progress and billings on construction contracts.
-Construction in progress and construction revenue.
-Billings on construction contracts and accounts receivable.
-Construction in progress and accounts receivable. - ✔✔-Construction in progress and
billings on construction contracts.
True or false: Both interest bearing and noninterest bearing notes bear interest. - ✔✔True
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Examsplug. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $13.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
75759 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now