AC 302 Week 2 EXAM Quiz 100% Correct
Question 1 Cost estimates at the end of the second year indicate that a loss will result on completion of the entire contract. Which of the following statements is correct?
Question 2. Question : Seasons Construction is constructing an office building under contract for Cannon Company. The contract calls for progress billings and payments of $1,240,000 each quarter. The total contract price is $14,880,000 and Seasons estimates total costs of $14,200,000. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2014.
Seasons Construction completes the remaining 25% of the building construction on December 31, 2016, as scheduled. At that time the total costs of construction are $15,000,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended December 31, 2016?
Revenue Expenses
Question 3. Question : Noncash consideration should be
Question 4. Question : The converged standard on revenue recognition
Question 5. Question : Under the completed-contract method
Question 6. Question : Green Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2014, Green entered into a fixed-price contract to construct an office building for $24,000,000. Information relating to the contract is as follows:
At December 31
2014 2015
Percentage of completion 15% 45%
Estimated total cost at completion $18,000,000 $19,200,000
Gross profit recognized (cumulative) 1,200,000 2,880,000
Contract costs incurred during 2015 were
Question 7. Question : Bella Pool Company sells prefabricated pools that cost $100,000 to customers for $180,000. The sales price includes an installation fee, which is valued at $25,000. The fair value of the pool is $160,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. The transaction price allocated to the pool and the installation is
Question 8. Question : Bruner Constructors, Inc. has consistently used the percentage-of-completion method of recognizing income. In 2014, Bruner started work on a $42,000,000 construction contract that was completed in 2015. The following information was taken from Bruner's 2014 accounting records:
Progress billings $13,200,000
Costs incurred 12,600,000
Collections 8,400,000
Estimated costs to complete 25,200,000
What amount of gross profit should Bruner have recognized in 2014 on this contract?
Question 9. Question : On November 1, 2014, Green Valley Farm entered into a contract to buy a $75,000 harvester from John Deere. The contract required Green Valley Farm to pay $75,000 in advance on November 1, 2014. The harvester (cost of $55,000) was delivered on November 30, 2014. The journal entry to record the contract on November 1, 2014 includes a
Question 10. Question : Gomez, Inc. began work in 2014 on contract #3814, which provided for a contract price of $14,400,000. Other details follow:
2014 2015
Costs incurred during the year $2,400,000 $7,350,000
Estimated costs to complete, as of December 31 7,200,000 0
Billings during the year 2,700,000 10,800,000
Collections during the year 1,800,000 11,700,000
Assume that Gomez uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2015 is
Question 11. Question : On January 15, 2014, 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. This contract should be
Question 12. Question : The first step in the process for revenue recognition is to
Question 13. Question : Consignments are a specialized marketing method whereby the
Question 14. Question : Transaction price for multiple performance obligations should be allocated
Question 15. Question : Botanic Choice sell natural supplements to customers with an unconditional right of return if they are not satisfied. The right of returns extends 60 days. On February 10, 2014, a customer purchases $3,000 of products (cost $1,500). Assuming that based on prior experience, estimated returns are 20%. The journal entry to record the sale and cost of goods sold includes a
Question 16. Question : The second step in the process for revenue recognition is to
Question 17. Question : Consigned goods are recognized as revenues by the
Question 18. Question : On August 5, 2014, Famous Furniture shipped 20 dining sets on consignment to Furniture Outlet, Inc. The cost of each dining set was $350 each. The cost of shipping the dining sets amounted to $1,800 and was paid for by Famous Furniture. On December 30, 2014, the consignee reported the sale of 15 dining sets at $850 each. The consignee remitted payment for the amount due after deducting a 6% commission, advertising expense of $300, and installation and setup costs of $390. The amount cash received by Famous furniture is
Question 19. Question : When multiple performance obligations exists in a contract, they should be accounted for as a single performance obligation when
Question 20. Question : During 2014, Gates Corp. started a construction job with a total contract price of $14,000,000. The job was completed on December 15, 2015. Additional data are as follows:
2014 2015
Actual costs incurred during the year $5,400,000 $6,100,000
Estimated remaining costs 5,400,000 â€â€
Billed to customer 4,800,000 9,200,000
Received from customer 4,000,000 9,600,000
Under the completed-contract method, what amount should Gates recognize as gross profit for 2015?
Question 21. Question : Eilert Construction Company had a contract starting April 2015, to construct a $21,000,000 building that is expected to be completed in September 2016, at an estimated cost of $19,250,000. At the end of 2015, the costs to date were $8,855,000 and the estimated total costs to complete had not changed. The progress billings during 2015 were $4,200,000 and the cash collected during 2015 was $2,800,000. Eilert uses the percentage-of-completion method.
At December 31, 2015, Eilert would report Construction in Process in the amount of
Question 22. Question : Seadrill Engineering licensed software to oil-drilling firms for 5 years. In addition to providing the software, the company also provides consulting services and support to ensure smooth operation of the software. The total transaction price is $350,000. Based on standalone values, the company estimates the consulting services and support have a value of $100,000 and the software license has a value of $250,000. Assuming the performance obligations are not interdependent, the journal entry to record the transaction includes
Question 23. Question : An option to purchase a warranty is recorded as
Question 24. Question : Monroe Construction Company uses the percentage-of-completion method of accounting. In 2015, Monroe began work on a contract it had received which provided for a contract price of $25,000,000. Other details follow:
2015
Costs incurred during the year $12,000,000
Estimated costs to complete as of December 31 8,000,000
Billings during the year 11,000,000
Collections during the year 6,500,000
What should be the gross profit recognized in 2015?
Question 25. Question : The role of the agent in a Principal-Agent relationship is to
USA 
India