60.1K

Verified Solution

Link Copied!

1.) Sam Baker signs a contract with Pit Company to purchase a gas fireplace unit. The sale agreement

for a total price of $ 3,000 and includes delivery of the un

it, installation, and a (wo-year warranty.

Installation successfully occurred on November 1, 2020. Pit Company often sells this

gas fireplace

for $ 2.500 and offers installation and warranty services

at $ 500 ar

id 5 300, respectively. Using the

stand-alone fair values, what amount

would be recorded as revenue on November 1

7070 under

the contract-based approach to revenue recognition?

Round to the nearest whole dollar

a. $2273

b. $2500

c. $2727

d. $3000

2.) Which of the following is a situation indicating that control over goods or services transters over a period of time?

a. Customer accepts delivery and installation of an alarm system.

b. Contractor constructing an office building.

c. Customer purchases a mattress and picks it up immediately.

d. Customer pays a contract plumber immediately after having their toilet fixed.

3.) Retailers who sell a product with a warranty period can recognize revenue when

a. the warranty period has expired

b. at the point of sale if the warranty amount can be estimated.

c. when cash is collected.

d. when the exact cost of the is known.

Answer & Explanation Solved by verified expert

See Answer