Revenue recognition

The first step in the process for revenue recognition is to

• determine the transaction price.

• identify the contract with customers.

• allocate transaction price to the separate performance obligations.

• identify the separate performance obligations in the contract.

The last step in the process for revenue recognition is to

• allocate transaction price to the separate performance obligations.

• recognize revenue when each performance obligation is satisfied.

• determine the transaction price.

• identify the contract with customers.

A contract

• must be in writing to be an enforceable contract.

• is an agreement that creates enforceable rights and obligations.

• is enforceable if each party can unilaterally terminate the contract.

• does not need to have commercial substance.

On January 15, 2018, Bella Vista Company enters into a contract to build custom equipment for ABC Carpet Company. The contract specified a delivery date of March 1. The equipment was not delivered until March 31. The contract required full payment of €75,000 30 days after delivery. The revenue for this contract should be

• recorded on January 15, 2018.

• recorded on March 1, 2018.

• recorded on March 31, 2018.

• recorded on April 30, 2018.

A performance obligation exists when

• a company receives the right to receive consideration.

• a contract is approved and signed.

• a company provides a distinct product or service.

• a company provides interdependent product or service.

Noncash consideration should be

• recognized on the basis of fair value of what is given up.

• recognized on the basis of original cost paid by customer.

• recognized on the basis of fair value of what is received.

• recognized on the basis of fair value of equivalent goods or services.

A transaction price for multiple performance obligations should be allocated

• based on selling price from the company’s competitors.

• based on what the company could sell the goods for on a standalone basis.

• based on forecasted cost of satisfying performance obligation.

• based on total transaction price less residual value.

The most popular input measure used to determine the progress toward completion is

• units-of-delivery method.

• cost-to-cost basis.

• labor hours worked.

• tons produced.

When a customer purchases a product but is not yet ready for delivery, this is referred to as

• a repurchase agreement.

• a consignment.

• a principal-agent relationship.

• a bill-and-hold arrangement

Consigned goods are recognized as revenues by the

• consignor when a sale to a third party has occurred.

• consignor when the merchandise has been shipped to a consignee.

• consignee when a sale to a third party has occurred.

• consignor when it receives payment from consignee for goods sold.