major manufacturer for the production of Item I. The carrying amount of the inventory of parts at the end of the fiscal year 2020 is €2,000,000, which was considerably higher compared to the level of inventory of Item I in previous periods. During January 2021 the manufacturer terminated the production of Item I and started the production of Item II. The parts produced by

major manufacturer for the production of Item I. The carrying amount of the inventory of parts at the end of the fiscal year 2020 is €2,000,000, which was considerably higher compared to the level of inventory of Item I in previous periods. During January 2021 the manufacturer terminated the production of Item I and started the production of Item II. The parts produced by

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 15E: On January 1, 2019, Piper Company entered into an agreement with Save-Mart to sell its most popular...

See similar textbooks

Similar questions

Novak Company has been having difficulty obtaining key raw materials for its manufacturing process. The company therefore signed a long-term noncancelable purchase commitment with its largest supplier of this raw material on November 30, 2025, at an agreed price of $382,800. At December 31, 2025, the raw material had declined in price to $346,730. What entry would you make on December 31, 2025, to recognize these facts? (List all debit entries before credit entries. Credit account titles are automatically indented when amount is entered. Do not Indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts.)
Dowell Fishing Supply, Inc., sold $50,000 of Dowell Rods on December 15, 2021, to Bassadrome. Because of a shipping backlog, Dowell held the inventory in Dowell’s warehouse until January 12, 2022 (having assured Bassadrome that it would deliver sooner if necessary). How much revenue should Dowell recognize in 2021 for the sale to Bassadrome?
Mimi Company has been having difficulty obtaining necessary raw materials for its manufacturingprocess. The company, therefore, signed a long-term noncancelable purchase commitment with itslargest supplier of this raw material on Jun3 30, 2020, at an agreed price of P800,000. On December31, 2020, the raw material had declined in price to P720,000 1.Assuming that on March 31, 2021, Mimi Company purchases the raw materials. During thistime, the market price of the raw materials is P810,000? P780,000? P690,000?
On 1 January 2020, Entity A sold 100 units of Product X to Entity B for $220 per unit payable on 31 December 2020. On the same date, the cash selling price of one Product X is $200. The customer obtained control of the product at contract inception. However, the contract permits the customer to return the product within 90 days, i.e. on or before 31 March 2020. Product X is a new product. It suffers insufficient testing before the sales to Entity B on 1 January 2020. Thus, Entity A has no relevant historical evidence of product returns or other available market evidence. On 31 March 2020, 15 units of Product X was returned. On 31 December 2020, all outstanding amount was settled. The cost of one Product X is $150. The end or reporting period of Entity A is 31 December. REQUIRED: Provide journal entries for Entity A from 1 January 2020 to 31 December 2020 under relevant accounting standards. ACCOUNTS FOR INPUT: | Bank | Payable | Receivable | Interest expense | Interest revenue |…
Leather is a primary material used by PT Juri for the manufacture of shoes. Leather inventory at 31 December 2021 had cost Rp50 million to purchase, but only had a net realizable value of Rp30 million. On the basis that PT Juri does not intend to dispose of the leather, the inventory has been included in the financial statements at a value Rp35 million. It is believed that this partially reflects the fall in value of the leather, but also takes account of the intention to retain the inventory for use in the production process. It is expected that the finished shoes, into which the leather will be incorporated, can be sold at reasonable profit margin. Required: 1. Advice correct accounting treatment of the leather inventory of the company at 31 December 2021. Explain. 2. Provide relevant journal entries.
In 2020, HP Company transferred goods to a retailer on consignment. The goods cost P450,000 and normally are sold at a 40% markup on cost. GGG paid P5,000 for the cost of the shipment while the retailer paid P3,800 for advertising and P2,800 for the cost of freight out. The parties agreed that GGG would reimburse the cost of advertising and freight paid by the retailer. In 2020, the retailer at the normal markup, sold 80% of the merchandise and the balance of the merchandise was returned to AAA and paid a freight of P2,500. The retailer withheld 15% commission from payment plus the amount reimbursable by the consignor. How much is the consignment net income?
During 2020, BIOT Company signed a non-cancelable contract with BTS Company to purchase 5,000 units of goods at P 1,500 per unit with delivery to be made in 2021. On December 31,2020, the price had fallen to P 1,450 per unit. On March 1,2021, the price per unit further decreased to P 1,350. What is the amount of loss on purchase commitments recognized upon delivery of the 1,000 sacks on March 1,2021?
Wildhorse Manufacturing Inc. is a local manufacturing company. Rather than sell its product directly, Wildhorse ships its finished goods inventory to CMR Retailing Ltd., who sells the product for Wildhorse on consignment. During 2020, Wildhorse ships $119,500 in merchandise to CMR. At the end of 2020, CMR has sold 65% of the merchandise for $72,000. CMR notifies Wildhorse of the sales, retains a 20% commission, and remits the cash due to Wildhorse. Prepare all the necessary journal entries on the books of Wildhorse Manufacturing to record the consignment transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) No. Account Titles and Explanation Debit Credit 1. (To record shipped merchandise) 2. (To record year end sales entry)…
Touch Tronix, Inc. sells component parts to Advanced Communications, Inc. a cell phone manufacturer. On December 10, 2020, Touch Tronix, Inc. sold €1,700,000 of goods to Advanced Communications, Inc. on account for €2,200,000. Terms of the sale were 2/10, net 30. On December 18, 2020, Advanced Communications, Inc. paid the account in full. Which of the following is true regarding the impact on the statement of financial position for Touch Tronix, Inc. when the payment is made on December 18, 2020? a. Assets decreased by €2,200,000. b. Assets decreased by €44,000. c. Assets increased by €2, 156, 000. d Assets decreased by €32, 500.
Company S signs several purchase contracts in 2022. Under the terms of one contract, Company S will take delivery of the inventory, sold on account, in 2023 and pay a price of $629,000 to Company R. The fair value of the inventory at the company's December 31, 2022 year end declines to $529,000. Company S does not expect to be able to recover its additional costs. Assume that the fair value remains at $529,000 until the goods are delivered. Is this an onerous contract in 2022? If so, why? Show journal entries for 2022 and 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Account Titles 2022 Loss on Purchase Contracts Liability for Onerous Contracts 2023 Debit Credit
During 2020, ABC Company signed a non-cancelable contract with XYZ Company to purchase 5,000 units of goods at P 1,500 per unit with delivery to be made in 2021. On December 31,2020, the price had fallen to P 1,450 per unit. On March 1,2021, the price per unit further decreased to P 1,350. What is the amount of loss on purchase commitments recognized upon delivery of the 1,000 sacks on March 1,2021? P 750,000 P 250,000 P 500,000 P 50
During 2020, ABC Company signed a non-cancelable contract with XYZ Company to purchase 5,000 units of goods at P 1,500 per unit with delivery to be made in 2021. On December 31,2020, the price had fallen to P 1,450 per unit. On March 1,2021, the price per unit further decreased to P 1,350. What is the amount of loss on purchase commitments recognized upon delivery of the 1,000 sacks on March 1,2021?Required to answer. Single choice.