Terra Bus Transportation Provides On-Campus Bus Services for Universities

question 296

Essay

Terra Bus Transportation provides on-campus bus services for universities. On January 1, it enters into a one-year contract with Moose University to operate five bus lines traveling throughout the campus. Under the contract, Terra will be paid $100,000 on the last day of each month. In addition, Terra will receive an additional $120,000 at the end of each six-month period, provided it remains free of accidents.

• On January 1, based on historical experience, Terra estimated that there is a 75% chance that it will remain free of accidents for the entire year.
• On March 20, three of the most senior drivers at Terra abruptly left. As a result, Terra had to hire inexperienced drivers to fill the vacant positions. Consequently, Terra revised its estimate to a 30% chance that it would earn the semiannual bonus.
• On June 30, Moose confirmed that there was no accident between January and June, so Terra would be entitled to the semiannual bonus.

Terra bases estimates of variable consideration on the expected value it expects to receive.

-Prepare Terra's January journal entry to account for the revenue earned from January 1 - January 31.

Understand the potential impact of biofuels like ethanol on food supplies and the environment.

Identify and differentiate between certification programs for environmentally sustainable buildings.

Recognize comprehensive environmental standards and their role in promoting sustainability.

Understand the principles of green marketing and the ethical considerations associated with greenwashing.

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Definitions:

Capital Balances

Refers to the amount of money that the owners of a company have invested in the business or retained from profits over time.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenues.

Closing the Revenue

The process of finalizing all revenue accounts and transferring their balances to permanent accounts at the end of an accounting period.

Capital Account

An account on the balance sheet representing the cumulative amount of investment in the business by the owners or shareholders, plus retained earnings.