Waldman Associates Received a Written, Approved Contract to Deliver Economic

question 263

Multiple Choice

Waldman Associates received a written, approved contract to deliver economic consulting services, with service and payment commencing in one month. The contract specifies the services that Waldman is to perform, and the payment terms. Waldman and the customer both can cancel the contract without penalty prior to commencing service. Does Waldman have a contract for purposes of revenue recognition on the day the contract is received?

• A) Yes, because Waldman has a written approved contract.
• B) No, because Waldman and the customer can cancel without penalty, and neither has performed an obligation under the contract.
• C) Maybe, depending on whether Waldman can estimate collectability of the receivable.
• D) There is insufficient data on which to base an answer.

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Definitions:

U.S. President

The U.S. President is the head of state and head of government of the United States, and is responsible for the executive branch of the federal government.

Real Wages

Wages adjusted for inflation, representing the purchasing power of income earned from labor.

Labor Markets

The supply and demand for labor, where employers seek to hire workers and workers seek employment.

Contract

A legally binding agreement between parties that outlines the terms and conditions under which a transaction or exchange is to take place.