CH 8 QUIZ

Question 1

Five Steps of Revenue Recognition

Answer 1

Identify contracts
Identify performance obligations
Determine transaction price
Allocate transaction price
Recognize Revenue

Question 2

Five Criteria to Identify Contracts

Answer 2

1. All parties agree
2. Partys rights identifiable
3. Payment terms identifiable
4. Commercial substance
5. Collection probable

Question 3

What happens if not all Contract Criteria met

Answer 3

recognize revenue when consideration received, consideration is non-refundable, and there are no more service obligations

Question 4

3 reasons for contract combining

Answer 4

Contracts negotiated as package
Consideration dependent on performance of another contract
Separate contracts part of one performance obligation

Question 5

2 Criteria to be Distinct

Answer 5

Customer can benefit from asset itself or with readily available resources
Promise of seller to deliver is separately identifiable from other promises

Question 6

Most common way to find variable consideration

Answer 6

Expected-Value Approach

Question 7

Noncash should be measured at:

Answer 7

Fair Value if estimable or stand-alone selling price if not estimable

Question 8

Main Selling Price Estimation Method

Answer 8

Residual Approach

Question 9

When are goods and services transferred over time (3 criteria)

Answer 9

Customer receives and consumes benefits simultaneously (subscriptions)
Customer controls asset as seller makes it
Seller is creating specialized asset that is only for one customer

Question 10

If seller doesn’t have a reasonable way to measure progress towards completion it should

Answer 10

not recognize revenue until it can estimate the process

Question 11

Indicators of Control (5 criteria)

Answer 11

seller has right to payment
customer has legal title
seller has transferred possession
customer has risk and reward
customer has accepted asset