Intermediate Accounting Exam 2 Review with 100% Verified Answers| Verified & Updated

True or false: An annuity due is the same as an ordinary annuity. - False In an annuity due, the payment occurs at the beginning of the period. In an ordinary annuity, the payment occurs at the end of the period. In a deferred annuity, a two-step process can be used to calculate the present value of the annuity. The first step requires the calculation of the present value of the annuity at the beginning of the annuity period. The second step involves discounting the amount calculated in step 1 -to its future value at maturity -to its future value as of today -to its present value as of today -to its present value at maturity - to its present value as of today The amount received for an extended warranty is initially -recognized as a deferred revenue liability. -ignored. -combined with the contract price for the related product. - recognized as a deferred revenue liability.Options for additional goods or services are considered performance obligations if they provide a material right to the customer that the customer -did not expect when entering into the contract. -expected when entering into the contract. -would not receive otherwise. -would receive otherwise. - would not receive otherwise. Which of the following situations may make the contract price less apparent? (Select all that apply.) -Fixed price listed in contract -Determining whether the seller is acting as principal or agent -Variable consideration provisions -Sales with right of return - -Determining whether the seller is acting as principal or agent -Variable consideration provisions -Sales with right of return In a(n) ______________ ______________, the payment is received or made at the beginning of the period, whereas in a(n) _____________ _____________, the payment is received at the end of each period. (Enter one word per blank.) - annuity due, ordinary annuity On January 1st, Guarder Consulting enters into a one-year contract with Smith Co. to restructure some of Smith's processes with a goal of cost savings. Smith pays Guarder an up-front fixed feeof $48,000 on January 1st. Guarder will also earn an additional $12,000 bonus if Smith achieves $100,000 of cost savings. Guarder estimates a 70% chance that Smith will achieve $100,000 of cost savings. Assuming that Guarder determines the transaction price as the most likely amount, what amount of revenue will be recorded at the end of the first month? - 5,000 1/31 Deferred revenue (48,000 / 12) 4,000 Bonus receivable (12,000 / 12) 1,000 Sales revenue (60,000 / 12) 5,000 Which of the following steps are involved in calculating the present value of a deferred annuity? (Select all that apply.) -Calculate the FV of the annuity as of the end of the annuity period