Certain business exchanges are very complex and may qualify as exceptional cases in which the related revenues
Question:
1. Franchisor grants a franchise to a franchisee; it collects part of the initial franchise fee and agrees to perform related initial services over an extended period.
2. Land development company acquires land for future development into a “sports retirement community,” subdivides the land into lots, and sells the lots on “credit” with payment to be made on a long-term basis.
3. Lessor leases equipment to a lessee on a long-term non-cancelable lease; the fair value of the leased item is greater than the cost, and the ownership of the leased item is transferred to the lessee by the end of the lease life.
4. A construction company builds bridges; it enters into a contract to construct a bridge for Rice County over a two-year period.
Required
For each of the preceding exchanges, (a) explain the revenue recognition issues involved, and (b) discuss when the revenue is recognized and by what method.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Intermediate Accounting
ISBN: 978-0324300987
10th Edition
Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones
Question Posted: