The Following Information Relates to Questions
Bensen Corporation Manufactures $\bullet$

question 64

Multiple Choice

The following information relates to questions
Bensen Corporation manufactures equipment used in the construction industry.Bensen manufactures a wide variety of machinery, including very small individual pieces of machinery to very large, complex systems containing numerous components.Unit selling prices range from $50,000 to $5,000,000 and are quoted inclusive of installation and training.The installation process does not involve changes to the features of the equipment and does not require proprietary information about the equipment in order for the installed equipment to perform to specifications.
Bensen Corporation has the following agreement with Keller Inc.:
$\bullet$ purchases equipment from Bensen for a price of $2,000,000 and chooses Bensen to do the installation.Bensen charges the same price for the equipment irrespective of whether it does the installation or not.
$\bullet$ The price of the installation service is estimated to have a fair value of $100,000.The fair value of the training sessions is estimated at $200,000.
$\bullet$ Keller is obligated to pay Bensen the $2,000,000 upon the delivery and installation of the equipment.
$\bullet$ Bensen delivers the equipment on September 1, 2011, and completes the installation of the equipment on November 1, 2011.Training related to the equipment starts once the installation is completed and lasts for 1 year.The equipment has a useful life of 10 years.
-Training revenue recognized in 2011 would be

• A)$0
• B)$29,333.
• C)$58,667.
• D)$176,000.

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Definitions:

Fixed Assets

Long-term tangible assets used in the operation of a business that are not likely to be converted to cash in the short term, such as buildings, machinery, and equipment.

Financially Solvent

The ability of an individual or organization to meet its long-term financial obligations.

Cash Flow from Assets

A measure of the amount of cash generated by a company's investments in assets after accounting for financing and operations.

Positive

Characterized by or displaying affirmation or acceptance or certainty.