Chapter 18 REVENUE RECOGNITION

Chapter 18 REVENUE RECOGNITION - Chapter 18: REVENUE...

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Chapter 18: REVENUE RECOGNITION 1. According to the FASB's conceptual framework, the process of reporting an item in the financial statements of an entity is a. recognition. b. realization. c. allocation. d. matching. 2. Flynn Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2007, Flynn entered into a fixed-price contract to construct an office building for $12,000,000. Information relating to the contract is as follows: At December 31 2007 2008 Percentage of completion 15% 45% Estimated total cost at completion $9,000,000 $9,600,000 Gross profit recognized (cumulative) 600,000 1,440,000 Contract costs incurred during 2008 were a. $2,880,000. b. $2,970,000. c. $3,150,000. d. $4,320,000. 3. Noland Constructors, Inc. has consistently used the percentage-of- completion method of recognizing income . In 2007, Noland started work on a $35,000,000 construction contract that was completed in 2008 . The following information was taken from Noland's 2007 accounting records: Progress billings $11,000,000 Costs incurred 10,500,000 Collections 7,000,000 Estimated costs to complete 21,000,000 What amount of gross profit should Noland have recognized in 2007 on this contract? a. $3,500,000
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This note was uploaded on 08/22/2010 for the course ACC accounting taught by Professor Dr.johnwilson during the Spring '09 term at University of Florida.

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Chapter 18 REVENUE RECOGNITION - Chapter 18: REVENUE...

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