CHAPTER 18 REVENUE RECOGNITION IFRS questions are available at the end of this chapter. TRUE-FALSE —Conceptual Answer No. Description F 1. Recognition of revenue. T 2. Realization of revenue. T 3. Delayed recognition of revenue. F 4. Recognizing revenue when right of return exists. T 5. Recognizing revenue prior to product completion. F 6. Use of percentage-of-completion method. T 7. Input measure for contract progress. T 8. Reporting Construction in Process and Billings on Construction in Process. F 9. Construction in Process account balance. F 10. Recognition of revenue under completed-contract method. T 11. Principal advantage of completed-contract method. F 12. Recognizing loss on an unprofitable contract. F 13. Recognizing current period loss on a profitable contract. T 14. Recognizing revenue under completion-of-production basis. F 15. Recording a loss on an unprofitable contract. F 16. Deferring revenue under installment-sales method. T 17. Deferring gross profit under installment-sales method. T 18. Classification of deferred gross profit. F 19. Recognizing revenue under cost-recovery method. T 20. Recognizing profit under cost-recovery method. MULTIPLE CHOICE —Conceptual Answer No. Description c 21. Revenue recognition principle. b 22. Definition of "realized." a 23. Definition of "earned." b S 24. Revenue recognition representations. d P 25. Definition of recognition. b P 26. Revenue recognition principle. d 27. Recognizing revenue at point of sale. d 28. Recording sales when right of return exists. c 29. Revenue recognition when right of return exists. d 30. Revenue recognition when right of return exists. b 31. Appropriate accounting method for long-term contracts. c 32. Percentage-of-completion method. b 33. Percentage-of-completion method. c 34. Classification of progress billings and construction in process. b 35. Calculation of gross profit using percentage-of-completion. a 36. Disclosure of earned but unbilled revenues. b 37. Disadvantage of using percentage-of-completion. d S 38. Percentage-of-completion input measures.
Test Bank for Intermediate Accounting, Fourteenth Edition 18 - 2 MULTIPLE CHOICE —Conceptual (cont.) Answer No. Description a S 39. Advantage of completed-contract method c 40. Revenue, cost, and gross profit under the completed-contract method. a 41. Loss recognition on a long-term contract. c 42. Accounting for long-term contract losses. d 43. Criteria for revenue recognition of completion of production. a 44. Completion-of-production basis. d S 45. Revenue recognition of completion of production. b S 46. Treatment of estimated contract cost increase. c 47. Presentation of deferred gross profit. c 48. Appropriate use of the installment-sales method. b 49. Valuing repossessed assets. b 50. Gross profit deferred under the installment-sales method. c S 51. Income realization on installment sales.
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