Marjorie sold her condominium for $500,000 on September

Explain the current environment regarding revenue recognition.

What is viewed as a major criticism of GAAP as regards revenue recognition?

What are the criteria to recognize revenue?

When is revenue recognized in the following situations: (a) Revenue from selling products? (b) Revenue from services performed? (c) Revenue from permitting others to use enterprise assets? (d) Revenue from disposing of assets other than products?

What is the proper accounting for volume discounts on sales of products?

What are the three alternative accounting methods available to a seller that is exposed to continued risks of ownership through return of the product?

Under what conditions may a seller who is exposed to continued risks of a high rate of return of the product sold recognize sales transactions as current revenue?

Explain a bill and hold sale. When is revenue recognized in these situations?

What are the reporting issues in a sale and buyback agreement?

Explain a principal-agent relationship and its significance to revenue recognition.

What is the nature of a sale on consignment?

Explain a multiple-deliverable arrangement. What is the major accounting issue related to these arrangements?

Explain how multiple-deliverable arrangements are measured and reported.

What are the two basic methods of accounting for longterm construction contracts? Indicate the circumstances that determine when one or the other of these methods should be used.

Hawkins Construction Co. has a $60 million contract to construct a highway overpass and cloverleaf. The total estimated cost for the project is $50 million. Costs incurred in the first year of the project are $8 million. Hawkins Construction Co. appropriately uses the percentageof-completion method. How much revenue and gross profit should Hawkins recognize in the first year of the project?

For what reasons should the percentage-of-completion method be used over the completed-contract method whenever possible?

What methods are used in practice to determine the extent of progress toward completion? Identify some input measures and some output measures that might be used to determine the extent of progress.

What are the two types of losses that can become evident in accounting for long-term contracts? What is the nature of each type of loss? How is each type accounted for?

Under the percentage-of-completion method, how are the Construction in Process and the Billings on Construction in Process accounts reported in the balance sheet?

Explain the differences between the installment-sales method and the cost-recovery method.

Identify and briefly describe the two methods generally employed to account for the cash received in situations where the collection of the sales price is not reasonably assured.

What is the deposit method and when might it be applied?

What is the nature of an installment sale? How do installment sales differ from ordinary credit sales?

Describe the installment-sales method of accounting.

How are operating expenses (not included in cost of goods sold) handled under the installment-sales method of accounting? What is the justification for such treatment?

Marjorie sold her condominium for $500,000 on September 14, 2014; she had paid $330,000 for it in 2006. Marjorie collected the selling price as follows: 2014, $80,000; 2015, $320,000; and 2016, $100,000. Marjorie appropriately uses the installment-sales method. Prepare a schedule to determine the gross profit for 2014, 2015, and 2016 from the installment sale.

When interest is involved in installment-sales transactions, how should it be treated for accounting purposes?

How should the results of installment sales be reported on the income statement?

At what time is it proper to recognize income in the following cases: (a) Installment sales with no reasonable basis for estimating the degree of collectibility? (b) Sales for future delivery? (c) Merchandise shipped on consignment? (d) Profit on incomplete construction contracts? (e) Subscriptions to publications?

When is revenue recognized under the cost-recovery method?

When is revenue recognized under the deposit method? How does the deposit method differ from the installmentsales and cost-recovery methods?

Why in franchise arrangements may it not be proper to recognize the entire franchise fee as revenue at the date of sale?

How does the concept of substantial performance apply to accounting for franchise sales?

How should a franchisor account for continuing franchise fees and routine sales of equipment and supplies to franchisees?

What changes are made in the franchisors recording of the initial franchise fee when the franchise agreement: (a) Contains an option allowing the franchisor to purchase the franchised outlet, and it is likely that the option will be exercised? (b) Allows the franchisee to purchase equipment and supplies from the franchisor at bargain prices?