Revenue Recognition & Depreciation, Basic Statistics

Assignment Help:
Question 2
Pankratov Lakes is a new recreational real estate development that consist of 500 Lake front and lake view lots. As a special incentive to the first 100 buyers of lake view lots, the developer is offering 3 years of free financing on 10 year, 12% notes, no down payment and one week at a nearby established resort – “a $1200 value”. The normal price per lot is $12,000. The cost per lake view lot to the developer is an estimated average of $2000. The development costs continue to be incurred, the actual average cost per lot is not known at this time. The resort promotion costs is $700 per lot. The notes are held by Davis Corp. a wholly-owned subsidiary of Pankratov.

1. Discuss the revenue recognition and gross profit measurement issues raised by this situation?
2. How would the developer’s past financial and business experience influence your decision concerning the recording of these transactions?
3. Assume 50 persons have accepted the offer, signed 10yr notes and have stayed at the local resort. Prepare the journal entries that you think are appropriate
4. What, if anything, should be disclosed in the notes to financial statements?



Question 3

Recently, John Brown Company experienced a strike that affected a number of its operating plants. The controller of this company indicated that it was not appropriate to report depreciation expense during this period because the equipment did not depreciate and an improper matching of costs and revenues would result. She based her position on the following points:

1. It is inappropriate to charge the period with costs for which there are no related revenues arising from production.
2. The basic factor of depreciation in this instance is wear and tear and because equipment was idle no wear and tear occurred
Please comment on the appropriateness of the controller’s comments.



Related Discussions:- Revenue Recognition & Depreciation

Mode, things to be investigate in mode

things to be investigate in mode

Spatial working memory , Preamble For the assignment you have been give...

Preamble For the assignment you have been given brief background details of a research project and you are required to produce a portfolio of short reports. Portfolios are to b

Two hanging masses, Two blocks with masses and hang one under the other. ...

Two blocks with masses and hang one under the other. For this problem, take the positive direction to be upward, and use for the magnitude of the acceleration due to gravity. Fi

#title.research.methods and statistics, identify a research report publishe...

identify a research report published by reputable agencies and evaluate the following ;the problem that was addressed

Factor reversal test, factor reversal test or circfied ular test satis reve...

factor reversal test or circfied ular test satis reversal test question #Minimum 100 words accepted#

Sale of an asset on account of depreciation, Write a short note on Sale of ...

Write a short note on Sale of An Asset on account of Depreciation. Ans. An asset can be sold anytime before or after its useful life estimated time, in case the asset is sold more

What is inference, Q. What is Inference? Ans. Inference is the pro...

Q. What is Inference? Ans. Inference is the process of deriving conclusions based on facts or premises. We often make inferences based on the results of statistical studi

Analyse resources and accountability, The unfortunately-named (and fictitio...

The unfortunately-named (and fictitious) town of Avalanche, Utah maintains a vibrant and growing ski industry.  As Director of Avalanche's search-and-rescue operations, you are alw

Operation research, Meaning and solving example using north-west corner in ...

Meaning and solving example using north-west corner in Transportation problem

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd