Electronic data gathering analysis and retrieval data base

Assignment Help Financial Accounting

Reference no: EM133209403

1. The Electronic Data Gathering Analysis and Retrieval Data Base may be found one the website of which of the following entities?

1. Public Company Accounting Oversight Board (PCAOB)

2. Internal Revenue Service (IRS)

3. American Institute of Certified Public Accountants (AICPA)

4. Securities and Exchange Commission (SEC)

Revenue Recognition Over Time

On January 1, 2020, Airport Renovation Company began renovating LaGuardina Airport in New York. The project is expected to be completed over a three year period, and during that time frame a total of 120 gates will be renovated. Once a gate becomes complete renovated, the Port Authority, which manages the airport, is allowed to use the gates. Airport Renovation Company will be paid a total of $ 2.4 Billion to renovate the airport, with a payment of $ 600 Million being made at the signing of the contract, and payments made at the end of each year in an amount equal to $ 20 Million multiplied by the number of gates completed during the year.

If any gates are completed after December 31, 2022, the amount received bu Airport Renovation Company for those gates will decrease to $ 15 Million per gate.

In accordance with US GAAP, Airport Renovation Company has decided to recognize revenue "over time", and will use "Total Costs Incurred / Estimated Total Costs" as their measure of completion.

As of December 31, 2020, Airport Renovation Company had incurred costs of $ 500,000,000, expects to incur additional costs of $ 1,100,000, and had completed 18 of the 120 gates. Accordingly, on December 31, 2020, Airport Renovation Company received payment in the amount of $ 360,000,000. As of December 31, 2020, Airport Renovation Company believes that the entire project will be completed in the three year period.

2. In accordance with US GAAP, how much "Revenue" should Airport Renovation Company record for the year ending December 31, 2020?

1. $ 360,000,000

2. $ 750,000,000

3. $ 960,000,000

4. None of the above

Revenue Recognition Framework

3. Under ASC 606, which of the following is a "Practical Expedient" which allows the company recognizing revenue to ignore the "benefits of financing" to the customer?

1. The total tranasction price received by the company selling a product is received within 12 months of delivery.

2. The firm selling the product is providing "zero percent financing" (i.e. the stated "interest rate" used to determine payments is zero percent per year)

3. Both A and B are "Practical Expedients" which allow the firm selling product to ignore the "benefits of financing"

4. None of the above.

4. When comparing the revenue related disclosures of General Dynamics under ASC 606 (i.e. the "new" revenue recognition guidance) to the revenue related disclosures under ASC 605 (i.e. the "old" revenue recognition disclosures), which of the following statements is (are) true?

1. Under ASC 606, General Dynamics discloses revenue by type of customer, whereas previously they made no suce disclosures.

2. Under ASC 606, General Dynamics discloses the balance of outstanding performance obligations, whereas previously they made no such disclosure.

3. Answers 1 and 2 are BOTH true.

4. None of the above.

Fair Value Hierarchy

5. Liquidity Investing Company owns 500 shares of High Flier Stock, and in accordance with US GAAP, is required to report the investment at "Fair Value". In accordance with the Fair Value Hierarchy, what attributes must be present in order for Liquidity Investing to classify the investment as "Level 1" under the Fair Value Hierarchy?

1. Shares of High Flier Stock identical to those owned by Liquidity Investment must sell in the market place.

2. There must be an "active" market for High Flier Stock.

3. Liquidity Investing must have access to the market for High Flier Stock.

4. All of the above attributes must be present.

Reference no: EM133209403

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