Homework 3 - P6-1Case AThe revenue has been earned is...

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Unformatted text preview: P6-1Case AThe revenue has been earned is determined by when and what McDonald's actually sold. The sale of the coupon book does not equal that the earning process is complete with the delivery of the book to the customer. The correct point for revenue recognition in this case is when the customer uses the coupon to purchase products in McDonald or when the coupon expires and McDonald's has no further obligation.Case BUnder the usual circumstances, revenue should be recognized as cash is collected. However given the risk of cash collection due to the fact that Quality Builders may default on the contract because of prior actions and the down payment is really low, FASB #66 actually gives authoritative guidance concerning minimum down payments before revenue can be recorded on a land sale. (For retail land sales, this Statement requires that the seller's receivables from the land sales be collectible and that the seller have no significant remaining obligations for construction or development before profits are recognized by the full accrual method.)construction or development before profits are recognized by the full accrual method....
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This note was uploaded on 12/01/2010 for the course UGBA 102A taught by Professor Udpa during the Summer '07 term at University of California, Berkeley.

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Homework 3 - P6-1Case AThe revenue has been earned is...

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