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F.S.A Practicals Try Me
F.S.A Practicals Try Me
F.S.A Practicals Try Me
ASSETS
4,043553 3,587,021
C) Based on your answer to 2A, state and justify the relative importance of growth in
stockholders` equity and growth in liabilities in financing the growth of assets over the
two years.
2. Assume the total sales price and cost of a property are $2,000,000 and $1,100,000,
respectively, so that the total profit to be recognized is $900,000. The amount of cash received
by the seller as a down payment is $300,000, with the remainder of the sales price to be
received over a 10-year period. It has been determined that there is significant doubt about the
ability and commitment of the buyer to complete all payments.
3. FATTY`s LTD has agreement with several major airlines to obtain airline tickets at reduced
rates. The company pays only for tickets it sells to customers. In the most recent period, Fatty`s
LTD sold airline tickets to customers over the internet for total of $1.1 million. The cost of these
tickets to Fatty`s LTD was $1 million. The company`s direct selling costs were $2,000. Once the
customers receive their tickets, the airline is responsible for providing all services associated
with the customer`s flight.
I. GROSS REPORTING
II. NET REPORTING
III. DETERMINE AND JUSTIFY THE APPROPRIATE METHOD FOR REPORTING REVENUES
4. K Technology Group has a contract to build a network for a customer for a total sales price of
$10 million. This network will take an estimated three years to build, and the total building
costs are estimated to be $6 million. K recognizes long-term contract revenue using the
percentage of completion method and estimate percentage complete based on expenditure
incurred as a percentage of total estimated expenditures.
a) At the end of year 1, K has spent $3 million. The total cost to complete is estimated to
be another $3 million. How much revenue will the company recognize in year 1?
b) At the end of year 2, K has spent $5.4 million. Total costs to complete are estimated to
be another $0.6 million. How much revenue will the company recognize in year 2?
c) At the end of year 3, the contract is complete. The company spent a total of $6 million.
How much revenue will be recognized in year 3?
A) Determine AAA`S net income from this project for each year using the percentage of
completion
B) And use the completed contract methods in accordance with U.S. GAAP