Assume That Yosuke Wants to Rent a Room at a Lakeview

question 1

Multiple Choice

Assume that Yosuke wants to rent a room at a Lakeview apartment,the landlord requires a one-time,non-refundable $50 application fee and a contract cancelable with 5 days notice,charges $500 per month to rent the apartment for the next 12 months.How are the $50 application fee and the $500 monthly rental accounted for under U.S.GAAP or under IFRS?

• A)Under U.S.GAAP,the $50 payment is recognized as revenue immediately,while the $500 payment is recorded as revenue each month.
• B)Under U.S.GAAP,the $50 payment is recorded as unearned revenue and allocated over a reasonable future period.The $500 payment is recorded as revenue each month.
• C)Under IFRS,the $50 payment is recorded as unearned revenue and allocated over a reasonable future period.The $500 payment is recorded as revenue each month.
• D)None of the above.

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Definitions:

Cognitive Abilities

Mental capabilities including reasoning, problem solving, planning, abstract thinking, complex idea comprehension, learning quickly, and learning from experience.

Working Memory Capacity

Refers to the amount of information that can be held in working memory at one time, which plays a critical role in reasoning, decision-making, and behavior.

Reading Comprehension

The ability to understand, engage with, interpret, and draw conclusions from written texts.

Working Memory

A cognitive system responsible for temporarily holding information available for processing and manipulation.