Provide clear, concise answers for the following: 1. Explain the conceptual difference between the earnings approach and

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Provide clear, concise answers for the following:

1. Explain the conceptual difference between the earnings approach and the contract-based approach to accounting for revenues.

2. How is revenue recognized under the contract-based approach?

3. How are sales accounted for in the presence of collection and measurement uncertainty?

4. Why is it important to understand the business perspective of selling transactions?

5. Fabathletics sends an outfit to monthly subscribers each month. If the customer does not want the outfit in a given month they can send it back before the last day of that month free of charge in exchange for a store credit. Fab prepares its financial statements in accordance with ASPE. Describe when these transactions should be recognized as sales under the earnings approach.

6. Alpine sells forklifts to Cusco Ltd. Cusco places an order for 50 forklifts to take advantage of a volume discount. Cusco does not have storage space to store the forklifts; therefore, they request that Alpine store the forklifts and provide them a delivery schedule. Cusco provides Alpine with insurance coverage for the forklifts and acknowledges that they are taking title to the forklifts immediately. Alpine stores the forklifts in a separate part of the warehouse and specifically identifies them as belonging to Cusco. Alpine invoices Cusco once the paperwork is complete and requires payment within the customary 30-day term. Explain when Alpine can recognize the revenue related to sale of forklifts to Cusco.

7. Some lending institutions require customers who borrow money from them to keep minimum cash balances in their chequing or savings accounts. What are these balances called? Explain why they might need to be separately reported on the company’s statement of financial position.