21. Unearned revenue arises when which of the revenue recognition criteria has not been satisfied?
A. Performance has not occurred.
B. The amount of revenue cannot be reasonably estimated.
C. The costs required to earn the revenue cannot be reasonably measured.
D. Collection of payment is not assured.
22. Montreal Machinery (MM) produces and sells computer-controlled machines that monitor and control the temperature and humidity in the production of candies. After they deliver and install the product they spend a month adjusting it to the customer's needs and environment and training their staff. They also provide a two-year warranty on the machines. When would be an appropriate time for MM to recognize the revenue from the sale of a machine?
A. On delivery to the customer if they can estimate the cost of the warranty.
B. After the month installation period.
C. After the two-year warranty has expired.
D. After the month installation period, if they can estimate the cost of the warranty.
23. Marlene, a fine arts student, makes gift cards from her artwork. She has made an arrangement with a local bookstore that the bookstore will carry her cards for her but only pay her when they are sold. The bookstore will keep 10% of the proceeds from the sale. This is an example of which of the following?
A. An installment sale
B. A consignment sale
C. The performance revenue recognition criterion.
D. The collectability revenue recognition criterion.
24. Which of the following statements about the flexibility of IFRS is not correct?
A. Flexibility is required because economic activities are complex.
B. Flexibility means that any interpretation of the rules is correct.
C. Flexibility requires judgment on the part of the preparers
D. Flexibility can apply within an industry, and across industries.
25. A corporation sold goods worth $15 million during 2012. Of this amount, $8 million were in cash and $7 million were sold on credit. Of the sales on credit, the company only collected $3 million of them during 2012. If the company does not normally experience problems with collectability, what amount of revenue should be recognized in 2012?
A. $3 million
B. $8 million
C. $11 million
D. $15 million
26. What information is necessary to use the percentage-of-completion method?
A. Only an estimate of the total costs.
B. An estimate of the total costs and the actual costs to date.
C. The actual costs to date and an estimate of the total revenues.
D. The actual costs to date and an estimate of the total costs and total revenues.
27. Beaver Dam Builders Inc. has collected the following information about a dam it is building: costs to date $300,000, estimated total costs $1,200,000, estimated total revenues $1,600,000. If Beaver Dam uses the percentage-of-completion method to recognize revenue, how much revenue related to the project have they recognized to date?
A. $300,000
B. $400,000
C. $1,200,000
D. $1,600,000
28. Beaver Dam Builders Inc. has collected the following information about a dam it is building: costs to date $300,000, estimated total costs $1,200,000, estimated total revenues $1,600,000. If Beaver Dam uses the percentage-of-completion method to recognize revenue, how much gross profit related to the project have they recognized to date?
A. None
B. $100,000
C. $300,000
D. $400,000
29. Beaver Dam Builders Inc. has collected the following information about a dam it is building: costs to date $300,000, estimated total costs $1,200,000, estimated total revenues $1,600,000. If Beaver Dam uses the zero-profit method to recognize revenue, how much revenue related to the project have they recognized to date?
A. None
B. $300,000
C. $400,000
D. $1,600,000
30. Beaver Dam Builders Inc. (BDBI) has collected the following information about a dam it is building: costs to date $300,000, estimated total costs $1,200,000, estimated total revenues $1,600,000. If BDBI has collected $200,000 to date uses the cost-recovery method to recognize revenue, how much gross profit (loss) related to the project have they recognized to date?
A. ($300,000)
B. $0
C. $100,000
D. $400,000