1. Under ASC Topic 606, revenue should be recognized for services when:

a) the service contract is in writing and signed.

b) it is assured that there will be no need for warranty performance after service is rendered.

c) the service performance obligation is satisfied.

d) the customer promises to pay for the service and the service date is confirmed.

2. According to ASC Topic 606 guidance for revenue recognition, which of the following statements is true regarding customer options when identifying performance obligations in a contract?

a) There is no additional performance obligation for additional goods or services if they will be received for free or at a discount, as long as the goods or services are similar to the other goods in the current contract.

b) There is an additional performance obligation for additional goods or services if the customer could obtain the same rights to additional goods or services without entering into the current contract agreement.

c) There is an additional performance obligation for additional goods or services if the option in the contract provides for the additional goods or services at their stand-alone selling price.

d) There is an additional performance obligation for additional goods or services if the customer could obtain the same rights to additional goods or services elsewhere but the additional good or services are provided for free or at a discount in the current contract.

3. Under the new revenue recognition guidance in ASC Topic 606, a performance obligation is satisfied over time if:

a) any of these answer choices is correct.

b) the firm’s performance does not create an asset with an alternative use and the firm has a right to receive payment for its performance to date.

c) the customer simultaneously receives and consumes the goods and services provided by the firm.

d) the firm’s performance creates or enhances an asset under the customer’s control.

4. Burgers and More operates a chain of fast-food restaurants across the United States. The restaurants are franchised operations. Under the franchise agreement, restaurant owners have the right to use the Burgers and More trade name, financing arrangements for franchisees, and management training at the corporate headquarters as well as the right to use training videos for their employees. The Burgers and More franchise contracts contain the following separate performance obligations:

a) intellectual property

b) financing and training

c) intellectual property, training

d) intellectual property, financing, and training

Answer rating: 100% (QA)

1 Solution optionc Explanation Optionc Correct The service performance obligation must be sa... View the full answer