INTERMEDIATE ACCOUNTING VOLUME 1
8TH CANADIAN EDITION BEECHY
DAVIDSON-CONROD FARRELL MCLEOD-
DICK TOMULKA SEVEL SOLUTION
MANUAL FINAL STUDY GUIDE 2026
SOLVED QUESTIONS FULLY CORRECT
⫸ Three performance obligations exist in this contract—manufacture of
the 3-D printer, installation services and the maintenance services.
Answer: Destin Company signs a contract to manufacture a new 3D
printer for $80,000. The contract includes installation which costs
$4,000 and a maintenance agreement over the life of the printer at a cost
of $10,000. The printer cannot be operated without the installation.
Destin Company as well as other companies could provide the
installation and maintenance agreement. What are Destin Company's
performance obligations in this contract?
⫸ Ismail accounts for the bundle of goods and services as a single
performance obligation because the goods or services in the bundle are
highly interrelated. Ismail also provides a significant service by
integrating the goods or services into the combined item (that is, the
hospital) for which the customer has contracted. In addition, the goods
or services are significantly modified and customized to fulfill the
contract. In other words, the company's objective is to transfer a
combined item. Revenue for the performance obligation would be
recognized over time by selecting an appropriate measure of progress
toward satisfaction of the performance obligation. Answer: Ismail
Construction enters into a contract to design and build a hospital. Ismail
,is responsible for the overall management of the project and identifies
various goods and services to be provided, including engineering, site
clearance, foundation, procurement, construction of the structure, piping
and wiring, installation of equipment, and finishing. Does Ismail have a
single performance obligation to the customer in this revenue
arrangement? Explain.
⫸ 1,127,500 Answer: Nair Corp. enters into a contract with a customer
to build an apartment building for $1,000,000. The customer hopes to
rent apartments at the beginning of the school year and provides a
performance bonus of $150,000 to be paid if the building is ready for
rental beginning August 1, 2018. The bonus is reduced by $50,000 each
week that completion is delayed. Nair commonly includes these
completion bonuses in its contracts and, based on prior experience,
estimates the following completion outcomes:
Completed by Probability
August 1, 2018 70 %
August 8, 2018 20
August 15, 2018 5
After August 15, 2018 5
Determine the transaction price for this contract.
⫸ (a) Groupo would recognize revenue of $1,000,000 at delivery.
(b) Groupo would recognize revenue of $800,000 at the point of sale.
, (c) Groupo would recognize revenue of $464,000 at the point of sale and
recognize interest revenue over the payment period. Answer: Presented
below are three revenue recognition situations.
(a) Groupo sells goods to MTN for $1,000,000, payment due at delivery.
(b) Groupo sells goods on account to Grifols for $800,000, payment due
in 30 days.
(c) Groupo sells goods to Magnus for $500,000, payment due in two
installments, the first installment payable in 18 months and the second
payment due 6 months later. The present value of the future payments is
$464,000.
Indicate the transaction price for each of these situations and when
revenue will be recognized.
⫸ A. DR NO ENTRY
CR NO ENTRY
B. DR CASH 900
CR UNEARNED SALES REVENUE 900
C DR UNEARNED SALES REVENUE 900
DR COST OF GOODS SOLD 575
CR SALES REVENUE 900
8TH CANADIAN EDITION BEECHY
DAVIDSON-CONROD FARRELL MCLEOD-
DICK TOMULKA SEVEL SOLUTION
MANUAL FINAL STUDY GUIDE 2026
SOLVED QUESTIONS FULLY CORRECT
⫸ Three performance obligations exist in this contract—manufacture of
the 3-D printer, installation services and the maintenance services.
Answer: Destin Company signs a contract to manufacture a new 3D
printer for $80,000. The contract includes installation which costs
$4,000 and a maintenance agreement over the life of the printer at a cost
of $10,000. The printer cannot be operated without the installation.
Destin Company as well as other companies could provide the
installation and maintenance agreement. What are Destin Company's
performance obligations in this contract?
⫸ Ismail accounts for the bundle of goods and services as a single
performance obligation because the goods or services in the bundle are
highly interrelated. Ismail also provides a significant service by
integrating the goods or services into the combined item (that is, the
hospital) for which the customer has contracted. In addition, the goods
or services are significantly modified and customized to fulfill the
contract. In other words, the company's objective is to transfer a
combined item. Revenue for the performance obligation would be
recognized over time by selecting an appropriate measure of progress
toward satisfaction of the performance obligation. Answer: Ismail
Construction enters into a contract to design and build a hospital. Ismail
,is responsible for the overall management of the project and identifies
various goods and services to be provided, including engineering, site
clearance, foundation, procurement, construction of the structure, piping
and wiring, installation of equipment, and finishing. Does Ismail have a
single performance obligation to the customer in this revenue
arrangement? Explain.
⫸ 1,127,500 Answer: Nair Corp. enters into a contract with a customer
to build an apartment building for $1,000,000. The customer hopes to
rent apartments at the beginning of the school year and provides a
performance bonus of $150,000 to be paid if the building is ready for
rental beginning August 1, 2018. The bonus is reduced by $50,000 each
week that completion is delayed. Nair commonly includes these
completion bonuses in its contracts and, based on prior experience,
estimates the following completion outcomes:
Completed by Probability
August 1, 2018 70 %
August 8, 2018 20
August 15, 2018 5
After August 15, 2018 5
Determine the transaction price for this contract.
⫸ (a) Groupo would recognize revenue of $1,000,000 at delivery.
(b) Groupo would recognize revenue of $800,000 at the point of sale.
, (c) Groupo would recognize revenue of $464,000 at the point of sale and
recognize interest revenue over the payment period. Answer: Presented
below are three revenue recognition situations.
(a) Groupo sells goods to MTN for $1,000,000, payment due at delivery.
(b) Groupo sells goods on account to Grifols for $800,000, payment due
in 30 days.
(c) Groupo sells goods to Magnus for $500,000, payment due in two
installments, the first installment payable in 18 months and the second
payment due 6 months later. The present value of the future payments is
$464,000.
Indicate the transaction price for each of these situations and when
revenue will be recognized.
⫸ A. DR NO ENTRY
CR NO ENTRY
B. DR CASH 900
CR UNEARNED SALES REVENUE 900
C DR UNEARNED SALES REVENUE 900
DR COST OF GOODS SOLD 575
CR SALES REVENUE 900
