FACH3 Homework - FACH3 Homework Questions 2. Deferred...

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FACH3 Homework Questions 2. Deferred revenue arises when payment is received prior to providing the service or delivering the goods. 3. Accrued revenue arises when services have been performed or goods have been delivered, but cash has not yet been collected. 4. Deferred expenses arise when cash is paid prior to receiving goods or services. 5. Accrued expenses arise when goods or services have been received, but cash has not yet been paid. 11. Amortization is the process of allocating the cost of a fixed asset that benefits more than one accounting period over the estimated useful life of the asset. 12. Amortization is necessary because the cost of the asset must be spread over the accounting periods during which the asset is used since it benefits more than one accounting period. It’s matching ! SE3-1 Salaries payable for Eve Company: [90,000 × (3 ÷ 10) + 5,000] = $32,000 SE3-6 Able Company: Adjustment for rent income Decrease revenue and record unearned revenue of $1,200 [= 4,800 × 3 ÷ 12]. The effect is an increase in liabilities and decrease in retained earnings. SE3-10 Paul Co.: Allocation of revenue between recognized and unearned Revenue Recognized Unearned Revenue at December 31 2008 0 $60,000 2009 $16,667 $43,333 2010 $20,000 $23,333 2011 $20,000 $ 3,333
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Exercises E3-1 Thomas Toy Company: Amortization Amortization expense: $4,000 [= $24,000 ÷ 6 years] Carrying Value 2009 21,000 2010 17,000 2011 13,000 2012
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This note was uploaded on 11/04/2011 for the course ACTG ACTG1p11 taught by Professor Brown during the Spring '11 term at Brock University.

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FACH3 Homework - FACH3 Homework Questions 2. Deferred...

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