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

Draw a gantt chart, Consider the Kristen Cookie Company case. From the n...

Consider the Kristen Cookie Company case. From the note: Wash&Mix: 6 mins per order (max 3 dozen) Dish up: 2 mins per dozen Set up timer: 1 min per dozen Bake: 9 mins per dozen

Standard deviation, define standard deviation. their purpose,uses,advantage...

define standard deviation. their purpose,uses,advantages nd disadvantages,examples ,formula for grouped and ungrouped.

Characteristics , Mention the characteristics of Statistics. Explain any tw...

Mention the characteristics of Statistics. Explain any two applications of Statistics

Regression analysis, Data was gathered on a group of ninth grade students. ...

Data was gathered on a group of ninth grade students. Some students have been diagnosed with a learning disability.  All students were measured on conduct, attention, hyperactivity

Index numbers, discuss the considerations to be borne in mind when construc...

discuss the considerations to be borne in mind when constructing index numbers

Define how to make a histogram and a frequency distribution, 1. Describe tw...

1. Describe two graphs/tables and how they are used to examine data. 2. Why are graphs and tables useful when examining data? 3. Describe how to make a histogram and a freque

Cumulative frequency, how would we find cumulative frequency for the median...

how would we find cumulative frequency for the median of discrete series

Standard deviation, how do i calculate standard deviation for a frequency d...

how do i calculate standard deviation for a frequency distribution

Conversion bonds, i need problems and their answers in a simplified way to ...

i need problems and their answers in a simplified way to understand the material because im really having troubles understanding how to solve conversion bonds and share warrants pr

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