GAAP That Covers Revenue Recognition for Multiple-Part Arrangements Requires That

question 186

Multiple Choice

GAAP that covers revenue recognition for multiple-part arrangements requires that a seller recognize revenue for a particular part if:

• A)The part has value on a stand-alone basis.
• B)Customer acceptance of the part is not contingent on successful delivery of a later part.
• C)The part constitutes at least a "preponderance of the fair value" of the total arrangement.
• D)Both the part has value on stand-alone basis and customer acceptance of the part is not contingent on successful delivery of a later part are required.

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Definitions:

Non-Interest-Bearing Note

A promissory note that does not accrue interest over time, meaning the borrower only repays the principal amount.

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a future date, classified as a liability on the balance sheet.

Cash

Money in the form of currency that can include bank notes and coins, available for transactions and investments.

Present Value

The value, as of now, of a forthcoming amount of money or cash flows over time, determined using a designated rate of return.