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intermediate accounting 11th

Intermediate Accounting IFRS International Adaptation 5th Edition Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield - Solutions

*E17.33 (LO 5, 6) (Recognition of Profit on Long-Term Contracts) During 2025, Nilsen Company started a construction job with a contract price of $1,600,000. The job was completed in 2027. The following information is available.2025 2026 2027 Costs incurred to date $400,000 $825,000 $1,070,000
E17.32 (LO 4) (Contract Costs, Collectibility) Refer to the information in E17.31.Instructionsa. Does the accounting for capitalized costs change if the contract is for 1 year rather than 3 years?Explain.b. Dan’s Demolition is a startup company; as a result, there is more than insignificant
E17.31 (LO 4) (Contract Costs) Rex’s Reclaimers entered into a contract with Dan’s Demolition to manage the processing of recycled materials on Dan’s various demolition projects. Services for the 3-year contract include collecting, sorting, and transporting reclaimed materials to recycling
E17.30 (LO 4) (Contract Modification) Tyler Financial Services performs bookkeeping and taxreporting services to startup companies in the Oconomowoc area. On January 1, 2025, Tyler entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,000 at the beginning of each
E17.29 (LO 4) (Contract Modification) In September 2025, Gaertner Corp. commits to selling 150 of its iPhone-compatible docking stations to Better Buy Co. for $15,000 ($100 per product). The stations are delivered to Better Buy over the next 6 months. After 90 stations are delivered, the contract
E17.28 (LO 4) (Existence of a Contract) On January 1, 2025, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until
E17.27 (LO 3) (Warranties) Celic SA manufactures and sells computers, which include an assurance-type warranty for the first 90 days. Celic offers an optional extended coverage plan under which it will repair or replace any defective part for 3 years from the expiration of the assurance-type
E17.26 (LO 3) (Warranty Arrangement) On January 2, 2025, Grando Company sells production equipment to Fargo Inc. for $50,000. Grando includes a 2-year assurance warranty with the sale of all its equipment. The customer receives and pays for the equipment on January 2, 2025. During 2025, Grando
E17.25 (LO 3) (Consignment Sales) On May 3, 2025, Eisler Company consigned 80 freezers, costing$500 each, to Remmers Company. The cost of shipping the freezers amounted to $840 and was paid by Eisler Company. On December 30, 2025, a report was received from the consignee, indicating that 40
E17.24 (LO 3) (Bill and Hold) Wood-Mode Company is involved in the design, manufacture, and installation of various types of wood products for large construction projects. Wood-Mode recently completed a large contract for Stadium Ltd., which consisted of building 35 different types of concession
E17.23 (LO 3) (Repurchase Agreement) Zagat Ltd. enters into an agreement on March 1, 2025, to sell Werner Metal aluminum ingots. As part of the agreement, Zagat also agrees to repurchase the ingots on May 1, 2025, at the original sales price of €200,000 plus 2%.Instructionsa. Prepare Zagat’s
E17.22 (LO 3) (Sales with Repurchase) Cramer AG sells idle machinery to Enyart SE on July 1, 2025, for €40,000. Cramer agrees to repurchase this equipment from Enyart on June 30, 2026, for a price of €42,400 (an imputed interest rate of 6%).Instructionsa. Prepare the journal entry for Cramer
E17.21 (LO 3) (Sales with Returns) Uddin Publishing Co. publishes college textbooks that are sold to bookstores on the following terms. Each title has a fixed wholesale price, terms f.o.b. shipping point, and payment is due 60 days after shipment. The retailer may return a maximum of 30% of an
E17.20 (LO 3) (Sales with Returns) Organic Growth Company is presently testing a number of new agricultural seed planters that it has recently developed. To stimulate interest, it has decided to grant to five of its largest customers the unconditional right of return to these products if not fully
E17.19 (LO 3) (Sales with Returns) On June 3, 2025, Hunt Company sold to Ann Mount merchandise having a sales price of $8,000 (cost $6,000) with terms of n/60, f.o.b. shipping point. Hunt estimates that merchandise with a sales value of $800 will be returned. An invoice totaling $120 was received
E17.18 (LO 3) (Sales with Allowances) On October 2, 2025, Laplante Company sold $6,000 of its elite camping gear (with a cost of $3,600) to Lynch Outfitters. As part of the sales agreement, Laplante includes a provision that, if Lynch is dissatisfied with the product, Laplante will grant an
E17.17 (LO 3) (Sales with Returns) Refer to the revenue arrangement in E17.16. Assume that instead of selling the tool sets on credit, Steele sold them for cash.Instructionsa. Prepare journal entries for Steele to record (1) the sale on March 10, 2025, (2) the return on March 25, 2025, and (3) any
E17.16 (LO 3) (Sales with Returns) On March 10, 2025, Steele Company sold to Barr Hardware 200 tool sets at a price of $50 each (cost $30 per set) with terms of n/60, f.o.b. shipping point. Steele allows Barr to return any unused tool sets within 60 days of purchase. Steele estimates that: (1) 10
E17.15 (LO 3) (Allocate Transaction Price) Appliance Center is an experienced home appliance dealer. Appliance Center also offers a number of services for the home appliances that it sells. Assume that Appliance Center sells ovens on a standalone basis. Appliance Center also sells installation
E17.14 (LO 3) (Allocate Transaction Price) Refer to the revenue arrangement in E17.13.Instructions Repeat requirements (a) and (b), assuming that Crankshaft does not have the market data to determine the standalone selling price of the installation services. As a result, an expected cost plus
E17.13 (LO 3) (Allocate Transaction Price) Crankshaft Company manufactures equipment.Crankshaft’s products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from €200,000 to €1,500,000 and are quoted inclusive of
E17.12 (LO 3) (Allocate Transaction Price) Shaw Ltd. sells goods that cost £300,000 to Ricard Company for £410,000 on January 2, 2025. The sales price includes an installation fee, which has a standalone selling price of £40,000. The standalone selling price of the goods is £370,000. The
E17.11 (LO 2) (Allocate Transaction Price) Refer to the revenue arrangement in E17.10.Instructions Repeat the requirements, assuming that (a) Geraths estimates the standalone selling price of the installation based on an estimated cost of $400 plus a margin of 20% on installation cost, and that (b)
E17.10 (LO 2) (Allocate Transaction Price) Geraths Windows manufactures and sells custom storm windows for three-season porches. Geraths also provides installation service for the windows.The installation process does not involve changes in the windows, so this service can be performed by other
E17.9 (LO 2, 3) (Determine Transaction Price) Taylor Marina has 300 available slips that rent for$800 per season. Payments must be made in full by the start of the boating season, April 1, 2026. The boating season ends October 31, and the marina has a December 31 year-end. Slips for future seasons
E17.8 (LO 2, 3) (Determine Transaction Price) Aaron’s Agency sells an insurance policy offered by Capital Insurance Company for a commission of $100 on January 2, 2025. In addition, Aaron will receive an additional commission of $10 each year for as long as the policyholder does not cancel the
E17.7 (LO 2) (Determine Transaction Price) Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of ¥10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair
E17.6 (LO 2) (Determine Transaction Price) Bill Amends, owner of Real Estate Inc., buys and sells commercial properties. Recently, he sold land for $3,000,000 to the Blackhawk Group, a developer that plans to build a new shopping mall. In addition to the $3,000,000 sales price, Blackhawk Group
E17.5 (LO 2) (Determine Transaction Price) Jeff Heun, president of Concrete Always, agrees to construct a concrete cart path at Dakota Golf Club. Concrete Always enters into a contract with Dakota to construct the path for $200,000. In addition, as part of the contract, a performance bonus of
E17.4 (LO 2) (Determine Transaction Price) Jupiter Company sells goods to Danone Inc. by accepting a note receivable on January 2, 2025. The goods have a sales price of $610,000 (cost of $500,000).The terms are net 30. If Danone pays within 5 days, however, it receives a cash discount of $10,000.
E17.3 (LO 1, 2) (Existence of a Contract) On May 1, 2025, Richardson Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo Landscaping Co. The contract requires Kickapoo to pay the contract price of €900 in advance on May 15, 2025. Kickapoo pays Richardson on May 15,
E17.2 (LO 1) (Fundamentals of Revenue Recognition) Respond to the questions related to the following statements.1. A wholly unperformed contract is one in which the company has neither transferred the promised goods or services to the customer nor received, or become entitled to receive, any
E17.1 (LO 1) (Fundamentals of Revenue Recognition) Presented below are five different situations. Provide an answer to each of these questions.1. The Kawaski Jeep dealership sells both new and used Jeeps. Some of the Jeeps are used for demonstration purposes; after 6 months, these Jeeps are then
*BE17.25 (LO 8) Frozen Delight, Inc. charges an initial franchise fee of $75,000 for the right to operate as a franchisee of Frozen Delight. Of this amount, $25,000 is collected immediately. The remainder is collected in four equal annual installments of $12,500 each. These installments have a
*BE17.24 (LO 7) Archer Construction Company began work on a $420,000 construction contract in 2025. During 2025, Archer incurred costs of $278,000, billed its customer for $215,000, and collected$175,000. At December 31, 2025, the estimated additional costs to complete the project total
*BE17.23 (LO 6) Guillen, Inc. began work on a $7,000,000 contract in 2025 to construct an office building. Guillen uses the cost-recovery method. At December 31, 2025, the balances in certain accounts were Construction in Process $1,715,000, Accounts Receivable $240,000, and Billings on
*BE17.22 (LO 5) Ting Group began work on a ¥7,000,000 contract in 2025 to construct an office building.During 2025, Ting Group incurred costs of ¥1,700,000, billed its customers for ¥1,200,000, and collected ¥960,000. At December 31, 2025, the estimated additional costs to complete the project
BE17.21 (LO 4) Stengel Co. enters into a 3-year contract to perform maintenance service for Laplante SE. Laplante promises to pay €100,000 at the beginning of each year (the standalone selling price of the service at contract inception is €100,000 per year). At the end of the second year, the
BE17.20 (LO 3) Nate Beggs signs a 1-year contract with BlueBox Video. The terms of the contract are that Nate is required to pay a non-refundable initiation fee of €100. No annual membership fee is charged in the first year. After the first year, membership can be renewed by paying an annual
BE17.19 (LO 4) On May 1, 2025, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2025. It is agreed that Eric will pay the full price of $25,000 in advance on June 15, 2025. Eric pays on June 15, 2025, and Mount delivers the product on September 30, 2025.
BE17.18 (LO 3) Talarczyk Company sold 10,000 Super-Spreaders on December 31, 2025, at a total price of $1,000,000, with a warranty guarantee that the product was free of any defects. The cost of the spreaders sold is $550,000. The assurance warranties extend for a 2-year period and are estimated to
BE17.17 (LO 3) Jansen Corporation shipped $20,000 of merchandise on consignment to Gooch Company. Jansen paid freight costs of $2,000. Gooch Company paid $500 for local advertising, which is reimbursable from Jansen. By year-end, 60% of the merchandise had been sold for $21,500. Gooch notified
BE17.16 (LO 3) Travel SA sells tickets for a Caribbean cruise on ShipAway Cruise Lines to Carmel Company employees. The total cruise package price to Carmel Company employees is €70,000. Travel SA receives a commission of 6% of the total price. Travel SA therefore remits €65,800 to ShipAway.
BE17.15 (LO 3) On June 1, 2025, Mills Company sells €200,000 of shelving units to a local retailer, ShopBarb, which is planning to expand its stores in the area. Under the agreement, ShopBarb asks Mills to retain the shelving units at its factory until the new stores are ready for installation.
BE17.14 (LO 3) Kristin Company sells 300 units of its products for $20 each to Logan Inc. for cash.Kristin allows Logan to return any unused product within 30 days and receive a full refund. The cost of each product is $12. To determine the transaction price, Kristin decides that the approach that
BE17.13 (LO 3) On July 10, 2025, Amodt Music sold CDs to retailers on account and recorded sales revenue of $700,000 (cost $560,000). Amodt grants the right to return CDs that do not sell in 3 months following delivery. Past experience indicates that the normal return rate is 15%. By October 11,
BE17.12 (LO 2, 3) Manual Company sells goods to Nolan Company during 2025. It offers Nolan the following rebates based on total sales to Nolan. If total sales to Nolan are 10,000 units, it will grant a rebate of 2%. If it sells up to 20,000 units, it will grant a rebate of 4%. If it sells up to
BE17.11 (LO 2, 3) Telephone Sellers sells prepaid telephone cards to customers. Telephone Sellers then pays the telecommunications company, TeleExpress, for the actual use of its telephone lines related to the prepaid telephone cards. Assume that Telephone Sellers sells £4,000 of prepaid cards in
BE17.10 (LO 2) On March 1, 2025, Parnevik Company sold goods to Goosen Inc. for $660,000 in exchange for a 5-year, zero-interest-bearing note in the face amount of $1,062,937 (an imputed rate of 10%). The goods have an inventory cost on Parnevik’s books of $400,000. Prepare the journal entries
BE17.9 (LO 2) On January 2, 2025, Adani SE sells goods to Geo Company in exchange for a zerointerest-bearing note with a face value of €11,000, with payment due in 12 months. The fair value of the goods at the date of sale is €10,000 (cost €6,000). Prepare the journal entry or entries to
BE17.8 (LO 2) Presented below are three revenue recognition situations.a. Yang sells goods to MTN for ¥1,000,000, payment due at delivery.b. Yang sells goods on account to Grifols for ¥800,000, payment due in 30 days.c. Yang sells goods to Magnus for ¥500,000, payment due in two installments,
BE17.7 (LO 2) Referring to the revenue arrangement in BE17.6, determine the transaction price for the contract, assuming (a) Nair is only able to estimate whether or not the building can be completed by August 1, 2026 (Nair estimates that there is a 70% chance that the building will be completed by
BE17.6 (LO 2) Nair A.G. enters into a contract with a customer to build an apartment building for€1,000,000. The customer hopes to rent apartments at the beginning of the school year and provides a performance bonus of €150,000 to be paid if the building is ready for rental beginning August 1,
BE17.5 (LO 2) Ismail Construction enters into a contract to design and build a hospital. Ismail is responsible for the overall management of the project and identifies various goods and services to be provided, including engineering, site clearance, foundation, procurement, construction of the
BE17.4 (LO 2) Destin Company signs a contract to manufacture a new 3D printer for $80,000. The contract includes installation which costs $4,000 and a maintenance agreement over the life of the printer at a cost of $10,000. The printer cannot be operated without the installation. Destin Company as
BE17.3 (LO 1, 2) Hillside Company enters into a contract with Sanchez Inc. to provide a software license and 3 years of customer support. The customer-support services require specialized knowledge that only Hillside Company’s employees can provide. How many performance obligations are in the
BE17.2 (LO 1) On May 10, 2025, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15, 2025. Greig agrees to pay the full contract price of $2,000 on July 15, 2025. The cost of the goods is $1,300. Cosmo delivers the product to Greig on June 15, 2025, and receives payment on
BE17.1 (LO 1) Leno Computers manufactures tablet computers for sale to retailers such as Fallon Electronics. Leno sold and delivered 200 tablet computers to Fallon for $20,000 on January 5, 2025. Fallon agreed to pay for the 200 tablet computers within 30 days. Fallon has a good credit rating and
*39. How should a franchisor account for continuing franchise fees and routine sales of equipment and supplies to franchisees?
*38. Why in franchise arrangements may it be improper to recognize the entire franchise fee as revenue at the date of sale?
*37. 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?
*36. 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.
*35. For what reasons should the percentage-of-completion method be used over the cost-recovery method whenever possible?
34. What are the two basic methods of accounting for long-term construction contracts? Indicate the circumstances that determine when one or the other of these methods should be used.
33. What qualitative and quantitative disclosures are required related to revenue recognition?
32. Explain the reporting for (a) costs to fulfill a contract and(b) collectibility.
31. Explain the accounting for contract modifications.
30. Describe the conditions when contract assets and liabilities are recognized and presented in financial statements.
29. Campus Cellular provides cell phones and 1 year of cell service to students for an upfront, non-refundable fee of $300 and a usage fee of$5 per month. Students may renew the service for each year they are on campus (on average, students renew their service one time). What amount of revenue
28. What are the two types of warranties? Explain the accounting for each type.
27. What is the nature of a sale on consignment?
26. Explain a principal-agent relationship and its significance to revenue recognition.
25. Explain a bill-and-hold arrangement. When is revenue recognized in these situations?
24. What are the reporting issues in a sale with a repurchase agreement?
23. Explain the accounting for sales with right of return.
22. How do companies recognize revenue from a performance obligation over time?
21. Under what conditions does a company recognize revenue over a period of time?
20. When does a company satisfy a performance obligation? Identify the indicators of satisfaction of a performance obligation.
19. Fuhremann Co. is a full-service manufacturer of surveillance equipment. Customers can purchase any combination of equipment, installation services, and training as part of Fuhremann’s security services. Thus, these performance obligations are separate with individual standalone selling
18. On what basis should the transaction price be allocated to various performance obligations? Identify the approaches for allocating the transaction price.
17. What is the proper accounting for volume discounts on sales of products?
16. In measuring the transaction price, explain the accounting for(a) time value of money and (b) non-cash consideration.
15. Refer to the information in Question 14. Assume that Allee has limited experience with a construction project on the same scale as the 10 speedboats. How does this affect the accounting for the variable consideration?
14. Allee Corp. is evaluating a revenue arrangement to determine proper revenue recognition. The contract is for construction of 10 speedboats for a contract price of $400,000. The customer needs the boats in its showrooms by February 1, 2026, for the sales season; the customer provides a bonus
13. What are some examples of variable consideration? What are the two approaches for estimating variable consideration?
12. What is the transaction price? What additional factors related to the transaction price must be considered in determining the transaction price?
11. Engelhart Implements Inc. sells tractors to area farmers. The price for each tractor includes GPS positioning service for 9 months (which facilitates field settings for planting and harvesting equipment). The GPS service is regularly sold on a standalone basis by Engelhart for a monthly fee.
10. When must multiple performance obligations in a revenue arrangement be accounted for separately?
9. What is a performance obligation? Under what conditions does a performance obligation exist?
8. On October 10, 2025, Executor SpA entered into a contract with Belisle Inc. to transfer Executor’s specialty products (sales value of€10,000, cost of €6,500) on December 15, 2025. Belisle agrees to make a payment of €5,000 upon delivery and signs a promissory note to pay the remaining
7. Explain the importance of a contract in the revenue recognition process.
6. 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 company assets, and (d) revenue from disposing of assets other than products.
5. Describe the critical factor in evaluating whether a performance obligation is satisfied.
4. Identify the five steps in the revenue recognition process.
3. Describe the revenue recognition principle.
2. What was viewed as a major criticism of IFRS as it relates to revenue recognition?
1. Explain the current environment regarding revenue recognition.
CA16.7 (LO 1, 2, 4) Ethics (Fair Value) Addison Manufacturing holds a large portfolio of debt and equity investments. The fair value of the portfolio is greater than its original cost, even though some investments have decreased in value. Sam Beresford, the financial vice president, and Angie
CA16.6 (LO 3) Writing (Equity Investments) On July 1, 2025, Selig Company purchased for cash 40% of the outstanding ordinary shares of Spoor Corporation. Both Selig and Spoor have a December 31 year-end. Spoor Corporation, whose shares are actively traded on the American Stock Exchange, paid a cash
CA16.4 (LO 2) (Equity Investments) The IASB issued accounting guidance to clarify accounting methods and procedures with respect to debt and equity investments. An important part of the statement concerns the distinction between held-for-collection debt investments, held-for-collection and selling

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