The Final Paper is composed of four sections. The first three sections address

The Final Paper is composed of four sections. The first three
sections address revenue recognition that involves constraints.
Accounting literature ASC 606 addresses revenue recognition and how to
determine a transaction price when constraints are involved. The last
section addresses asset liability obligations (ALO) which arise when
future obligations must be recorded. The section addresses the future
obligations that arise when a cranberry bog closes and the reclamation
process starts. Document any information used from sources in APA style
as outlined in the Writing Center’s Citing Within Your PaperLinks to an external site. guide. The evaluation of the four sections will be graded using the following percentages:
Section 1: 10%
Section 2: 15%
Section 3: 25%
Section 1: Write one page. Read the first four pages in Variable Consideration and the ConstraintLinks to an external site., stopping at Diversity in Thought. Write a one-page report that addresses the bullets below. Your writing should reference the Accounting Standards Codification, Section ASC 606
Download Accounting Standards Codification, Section ASC 606
using proper in-text citations. Include the following in your evaluation:
Describe variable consideration.
Explain what a company must do if a contract contains a variable consideration.
Identify the items in a contract that generally result in a variable consideration.
Explain the expected value and most likely approach.
Summarize the factors to be considered in the analysis when a reversal could occur and why they are important.
Section 2: Write one page.
Scenario:
Absco, Inc., is a calendar year-end clothing manufacturer that sells
exclusively to retailers. It engages in a large number of contracts with
its customers. Absco signed a contract with Socks Are Us to ship
100,000 pairs of socks on December 27. The contract price is $5 per pair
with nonrefundable payment due upon receipt of the socks. Absco
immediately delivers the socks to Socks Are Us once the contract is
signed by both parties with the socks arriving on December 28. However,
Socks Are Us has not remitted payments as of December 31. It is clear to
Absco that it will have to offer the customer a price concession in
order to receive any payment at all. Absco has not had extensive
dealings with Socks Are Us but estimates that it will need to offer a
25% discount.
Using the Accounting Standards Codification, Section ASC 606
Download Accounting Standards Codification, Section ASC 606
as a source,
Identify whether Absco should recognize any revenue related to the transaction scenario in the current year.
Calculate how much.
Your answer and calculations should be one page and reference the Accounting Standards Codification, Section ASC 606
Download Accounting Standards Codification, Section ASC 606
using proper in-text citations.
Section 3: Write one page with calculations.
Scenario:
Absco signed a contract with Jeans Are Us to ship 300,000 pairs of
jeans. The contract price is $20 per pair. These jeans are very
fashionable at the current time but are not expected to stay in style
for a long period of time. Because they are new, Absco has only
manufactured 10,000 pairs. The contract specifies that Absco will
immediately ship the 10,000 pairs and then will ship the remaining
portions of the 290,000 pairs as soon as possible after a specific
number of pairs are requested by Jeans Are Us. If Absco has shipped
fewer than 300,000 pairs by the end of the year, it will ship the
remaining jeans to fulfill the contract at the end of year one. Because
Jeans Are Us is concerned that the demand for jeans will be heavy, it
has provided an incentive in the contract for Absco to expedite
production of the jeans. Jeans Are Us will provide a bonus to Absco if
it delivers the jeans within a certain period.
The percentage bonus is as follows:
Delivered Within Percentage Bonus
1 day of request 5%
5 days of request 4%
10 days of request 3%
15 days of request 2%
Absco
has never been involved in a transaction that involves bonuses for
delivery expediency. In addition, because of the newness of the style of
jeans on the market, Jeans Are Us is not able to give Absco any idea of
when it will request jeans and how many it will request each time.
Absco uses the expected value method of measuring variable
consideration. Accordingly, it has determined that the expected value of
the bonus consideration is $180,000. However, Absco is quite uncertain
how quickly it can manufacture these jeans.
Using Accounting Standards Codification, Section ASC 606
Download Accounting Standards Codification, Section ASC 606
as a source and the expected value method,
State the total transaction price with calculations in one page.
Your statement and calculations should reference the Accounting Standards Codification, Section ASC 606
Download Accounting Standards Codification, Section ASC 606
using proper in-text citations.
Section 4: Write three pages with calculations.
Scenario:
River Spray Company was organized to grow cranberries. They entered
into an agreement with a landowner to lease 125 acres to develop a
cranberry bog. The agreement states that River Spray will be obligated
to transform the land back to its original condition at the end of the
five-year agreement. Prior to receiving the permit, River Spray
submitted a legally-binding plan that included a timetable for the full
reclamation process. After the end of five years, River Spray will
restore the land to its original condition.
River Spray has made the following estimates:
Labor costs to drain the bog are presently $22 hour but could increase anywhere between 7 and 14%.
The labor hours associated with draining the bog are approximately 10 to 15 hours per acre.
Labor costs to backfill the soil removed are estimated at 25 to 30 hours per acre.
The acreage will have to be reseeded, which will cost approximately $800 an acre.
Native tree seedlings will have to be planted at a cost of $20,000 and labor of $1,500 per acre.
An additional $200,000 to $300,000 is estimated for damages caused by air and water pollution.
Wildlife will also have to be restored at a cost of $150,000.
Overhead costs should be approximately 70% of total labor.
The risk-free rate is presently 2%.
Inflation is estimated to be approximately 2%.
Read the River Spray Company scenario. Using the PDF, Asset Retirement Obligations
Download Asset Retirement Obligations
(pages A1-A6) as a source, in three pages,
State the amount PDC should recognize related to this asset retirement obligation.
Include an Excel schedule and calculations as presented in the Asset Retirement Obligations article.
Reference
the Accounting Standards Codification, Section ASC 410-20 using proper
in-text citations. You may want to review the Ashford Writing Center’s Citing Within Your PaperLinks to an external site. web page for proper use of in-text citations.
The Final Paper
Must
be five to seven double-spaced pages in length (not including title and
references pages) and formatted according to APA style as outlined in
the Writing Center’s APA StyleLinks to an external site. style.
Must include a separate title page with the following:
Title of paper
Student’s name
Course name and number
Instructor’s name
Date submitted

The post The Final Paper is composed of four sections. The first three
sections address appeared first on School Core.

Reference no: EM132069492

WhatsApp
Hello! Need help with your assignments?

Have A Question?

X