Coronado Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $1,828,000. Coronado has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Coronado has experience with sales like these in the past and estimates that the maximum amount of price concessions is $295,000. (a) Determine the amount of revenue that Coronado should recognize for the sale of Stairmasters to Physical Fitness, Inc. Revenue (gross method) = ? Revenue (net method) = ?
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Coronado Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $1,828,000. Coronado has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Coronado has experience with sales like these in the past and estimates that the maximum amount of price concessions is $295,000.
(a) Determine the amount of revenue that Coronado should recognize for the sale of Stairmasters to Physical Fitness, Inc.
Revenue (gross method) = ?
Revenue (net method) = ?
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- Fahey Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $2,000,000. Fahey has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Fahey has experience with sales like these in the past and estimates that the maximum amount of price concessions is $300,000. Instructions a. Determine the amount of revenue that Fahey should recognize for the sale of Stairmasters to Physical Fitness, Inc. b. According to GAAP, in some situations, the amount of revenue recognized may be constrained. Explain how the accounting for the Stairmasters sales might be affected by the revenue constraint due to variable consideration or returns. c. Some believe that revenue recognition should be constrained by collectibility. Is such a view consistent with GAAP? Explain.(Discounts) Fahey Company sells Stairmasters to a retailer, Physical Fitness, Inc., for $2,000,000. Fahey has a history of providing price concessions on this product if the retailer has difficulty selling the Stairmasters to customers. Fahey has experience with sales like these in the past and estimates that the maximum amount of price concessions is $300,000.Instructions(a) Determine the amount of revenue that Fahey should recognize for the sale of Stairmasters to Physical Fitness, Inc.(b) According to GAAP, in some situations, the amount of revenue recognized may be constrained. Explain how the accounting for the Stairmasters sales might be affected by the revenue constraint due to variable consideration or returns.(c) Some believe that revenue recognition should be constrained by collectibility. Is such a view consistent with GAAP? Explain.Finerly Corporation sells cosmetics through a network of independent distributors. Finerly shipped cosmetics to its distributors and is considering whether it should record $300,000 of revenue upon shipment of a new line of cosmetics. Finerly expects the distributors to be able to sell the cosmetics, but is uncertain because it has little experience with selling cosmetics of this type. Finerly is committed to accepting the cosmetics back from the distributors if the cosmetics are not sold. How much revenue should Finerly recognize upon delivery to its distributors?
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- Ginger Ltd is marketing a ‘surfing bundle’ in which, for $2200, it provides customers with a surfboard(which retails separately for $1700), a wetsuit (which retails separately for $500) and five lessons(which retail separately for $400). You are required to determine:a) Whether separate performance obligations exist, and to explain why you made thisjudgement.b) How much of the transaction price to allocate to each performance obligation?AuctionCo.com sells used products that are collected from different suppliers. Assume a customer purchases a used bicycle through AuctionCo.com for $300. AuctionCo.com agrees to pay the supplier $200 for the bicycle. The bicycle will be shipped to the customer by the original bicycle owner. these are the questions AuctionCo.com takes control of this used bicycle before the sale and pays $200 to the supplier. Under this assumption, how much revenue would AuctionCo.com recognize at the time of the sale to the customer? AuctionCo.com never takes control of this used bicycle before the sale. Instead, the bicycle is shipped directly to the customer by the original bicycle owner, and then AuctionCo.com pays $200 to the supplier. Under this assumption, how much revenue would AuctionCo.com recognize at the time of the sale to the customer? Assume AuctionCo.com promises to pay $200 to the supplier regardless of whether the bicycle is sold, but the bicycle will continue to be shipped…Assume McDonald’s enters into a contract to sell Billy Bear dolls for Toys4U Stores. Based on the contract,McDonald’s displays the dolls in selected stores. Toys4U is not paid until the dolls have been sold by McDonald’s, and unsold dolls are returned to Toys4U.Required:Determine whether Toys4U has satisfied its performance obligation when it delivers the dolls to McDonald’s.Explain your answer.Cutler Education Corporation developed a software product to help children under age 12 learn mathematics. Thesoftware contains two separate parts: Basic Level (Level I) and Intermediate Level (Level II). Parents purchaseeach level separately and are eligible to purchase the access code for Level II only if their children pass the LevelI exam.Kerry purchases the Level I software at a price of $50 for his son, Tom, on December 1. Suppose Tom passedthe Level I test on December 10, and Kerry immediately purchased the access code for Level II for an additional$30. Cutler provided Kerry with the…
- eBay sells used products collected from different suppliers. Assume a customer purchases a used bicycle through eBay for $300. eBay agrees to pay the supplier $200 for the bicycle. The bicycle will be shipped to the customer by the original bicycle owner. Assume eBay bay never takes control of the used bicycle before the sale. Instead the bicycle is shipped directly to the customer by the original bicycle owner, and then eBay pays $200 to the supplier. How much revenue would eBay recognize at the time of the sale? Why?Isabel Company is a manufacturer of deodorant and sells its product through local retailers. The deodorant costs P64 to the retailer. Retailers sell the product to its customers and for each product purchased by the customer, a coupon of P20 discount is given and may be used on future purchase of the same product. Retailers are reimbursed for the discount by the manufacturer when customers redeem their coupons. During the current year, the entity sold 10,000 deodorants to local retailers at P64, each or P640,000. The entity expected. that 80% of the coupons issued will be redeemed. At year end, the entity paid the retailers P50,000 as reimbursement. Required: 1. Compute the stand-alone selling price of the rebate coupons. 2. Allocate the transaction price between the products sold and the rebate coupons. 3. Prepare journal entries for the current year.Wilson Links Products sells a product that involves two separate performance obligations: the SwingRight golf club weight and the SwingCoach teaching software. SwingRight has a stand-alone selling price of $185. Wilson sells both the SwingRight and the SwingCoach as a package deal for $270. The SwingCoach software is not sold separately. Wilson is aware that other vendors charge $170 for similar software, and Wilson’s prices are generally 10% lower than what is charged by those vendors. Wilson estimates that it incurs approximately $100 of cost per copy of the software, and usually charges 50% above cost on similar products.Estimate the stand-alone selling price of the software using the adjusted market assessment approach.