Section 2Question8 of 40A company entered into a $100 million contract to build a new sports facility. Construction was 15% complete at the end of Year 1 and 65% complete at the end of Year 2. Just prior to the end of Year 2, however, the buyer requested some upgrades to the original contract (higher-quality exterior and interior finishing materials) and agreed to pay an extra $10 million for these changes. The project manager estimates that the expanded contract (including extras) is 60% complete. Under the converged revenue
recognition standard issued by the International Accounting Standards Board and Financial Accounting Standards Board in May 2014, the amount of revenue that the company should recognize in Year 2 is closestto: $51 million.$50 million.$56 million. Question not answeredThe $10 million of upgrades is considered a modification of an existing contract. The company must reflect the effect of the modification on a cumulative catch-up basis. CFA Level I "Understanding Income Statements," Elaine Henry and Thomas R. Robinson Section 3.4 Question9 of 40A global equity investor makes investment decisions based on only the P/E. The average P/E of all global distribution:Earnings GrowthP/ELower third5%8Middle third10%15Top third8%25If the investor selects only stocks from the lower third of the distribution, it would be mostappropriate to classify the investor as a: Question not answeredThis investor is interested in undervalued stocks (stocks with below-average P/E) and thus is a value investor.
CFA Level I “Financial Statement Analysis: Applications,” Thomas R. Robinson, Jan Hendrik van Greuning, Elaine Henry, and Michael A. Broihahn Section 5 Question10 of 40Which of the following is most likely a sign of inventory manipulation to improve reported financial results?
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