Corlis Custom Builders Designs Decks, Gazebos, and Play Equipment for Residential

question 90

Essay

Corlis Custom Builders designs decks, gazebos, and play equipment for residential homes. The following was provided for the year ended September 30, 2016:
The average design fee is $700. There were 2,000 designs processed during the year.
Required:
a. Prepare a statement of cost of services sold.
b. Prepare an income statement.
c. Discuss three differences between services and tangible products.

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Definitions:

Preferred Stock

A category of corporate ownership that ranks above common stock regarding asset and earning claims, typically paying out dividends at a fixed rate.

Outstanding Common Stock

The total shares of common stock that are currently held by shareholders, including those held by the public as well as restricted shares owned by the company’s officers and insiders.

Acquisition-Date Fair Value

The valuation of an asset or liability obtained at the time it is acquired or assumed in a business combination.

Goodwill

An intangible asset that arises when a company acquires another business for more than the fair value of its identifiable net assets, representing expected future benefits from synergies, brand, and customer loyalty.