1. The failure of an individual to have a will canresult in which of the following?
I. Favorite relatives may be disinherited
II. Testamentary gifts to charity cannot be made.
a) I only
b) II only
c) Both I and II
d) Neither I nor II
2. Which of the following statements concerning a validwritten will is (are) correct?
I. A testatorâs signature must be notarized when the will isexecuted
II. A testator must have testamentary capacity at the time ofdeath
a) I only
b) II only
c) Both I and II
d) Neither I nor II
3. Which of the following statements concerning theinstallment sale of property is (are) correct?
I. The interest rate agreed to by the parties to the sale isconclusive for tax purposes.
II. The gain on the sale is recognized by the seller ratably asthe installment payments are received.
a) I only
b) II only
c) Both I and II
d) Neither I nor II
4. An executor may value assets as of the date of deathor the alternate valuation date 6 months after death. Assuming theexecutor elects the alternate valuation date, which of thefollowing statements is (are) correct?
I. Property sold by the executor before the alternate valuationdate is valued at its armâs-length sale price.
II. Property that has increased in value since the date of deathis valued at the alternate valuation date.
a) I only
b) II only
c) Both I and II
d) Neither I nor II
| 1. The failure of an individual to have a will canresult in which of the following? I. Favorite relatives may be disinherited II. Testamentary gifts to charity cannot be made. a) I only b) II only c) Both I and II d) Neither I nor II |
| 2. Which of the following statements concerning a validwritten will is (are) correct? I. A testatorâs signature must be notarized when the will isexecuted II. A testator must have testamentary capacity at the time ofdeath a) I only b) II only c) Both I and II d) Neither I nor II |
| 3. Which of the following statements concerning theinstallment sale of property is (are) correct? I. The interest rate agreed to by the parties to the sale isconclusive for tax purposes. II. The gain on the sale is recognized by the seller ratably asthe installment payments are received. a) I only b) II only c) Both I and II d) Neither I nor II |
| 4. An executor may value assets as of the date of deathor the alternate valuation date 6 months after death. Assuming theexecutor elects the alternate valuation date, which of thefollowing statements is (are) correct? I. Property sold by the executor before the alternate valuationdate is valued at its armâs-length sale price. II. Property that has increased in value since the date of deathis valued at the alternate valuation date. a) I only b) II only c) Both I and II d) Neither I nor II |
Related questions
| 1. Which of the following statements concerningqualified disclaimers of gifted property is (are)correct? I. The disclaimer must be in writing. II. The person making the disclaimer may direct who is to be therecipient of the giftedproperty. a) I only b) II only c) Both I and II d) Neither I nor II |
| 2. Which of the following statements concerninggrantor-retained annuity trusts (GRATs) is (are)correct? I. These trusts provide the grantor with a fixed annual annuityfor a term of years or life II. A goal in establishing a GRAT is to transfer property at areduced transfer tax cost. a) I only b) II only c) Both I and II d) Neither I nor II |
| 3. Which of the following statements concerningvaluation for gift tax purposes is (are) correct? I. The value of a life insurance contract is equal to theaggregate gross premium paid, regardless of when the contract wasgifted. II. If blockage exists, a lower gift value is permitted forshares of stock because of the effect of dumping a large number ofshares on the market at one time. a) I only b) II only c) Both I and II d) Neither I nor II |
| 4. Which of the following statements concerning wills is(are) correct? I. A will may be revoked by the testator prior to his or herdeath. II. An adult child may be disinherited entirely by a parent inmost states. a) I only b) II only c) Both I and II d) Neither I nor II |
| 1. Which of the following statements concerning federalgift and estate taxes is (are) correct? I. The donorâs gross estate includes the amount of any gifttaxes paid by the donor on gifts made within 3 years of death. II. Gifts made within 3 years of death are brought back into thedonorâs gross estate. a) I only b) II only c) Both I and II d) Neither I nor II |
| 2. Which of the following statements concerning statedeath taxes is (are) correct? I. The federal state death tax deduction is allowed only if afederal estate tax Form 706 return must be filed. II. State estate and inheritance taxes are generally imposed atthe same rate regardless of the relationship of the deceased to thebeneficiary. a) I only b) II only c) Both I and II d) Neither I nor II |
| 3. Important factors in assessing liquidity needs inestate planning include which of the following? I. the amount and terms of debt of the estate owner II. the marital status of the testator a) I only b) II only c) Both I and II d) Neither I nor II |
| 4. Non-tax benefits of lifetime gifts include which ofthe following? I. obtaining privacy that is not possible when testamentarytransfers are made II. reducing probate and administrative costs a) I only b) II only c) Both I and II d) Neither I nor II |
Identify two categories of revenue for Panera Bread from the table in the article Revenue Recognition: Key differences between U.S. GAAP and IFRSs. Compare and contrast the companyâs current U.S. GAAP revenue recognition with the potential adoption of IFRS. Provide the IASB Framework or the IAS statement, the changes in revenue recognition as well as potential challenges the company may face in adoption.
Table:
| Subject | U.S. GAAP | IFRSs |
|---|---|---|
| Concept/objective | realized or realizable and earned. | According to paragraph 83 of the IASB's Framework for the Preparation and Presentation of Financial Statements, revenue is recognized when (1) "it is probable that any future economic benefit" will flow to the entity and (2) such a benefit can be measured reliably. Further, paragraph 93 of the IASB Framework indicates that revenue normally must be earned before it can be recognized. |
| Definition of revenue | Paragraph 78 of FASB Concepts Statement No. 6, Elements of Financial Statements, defines revenue as "inflows or other enhancements of assets of an entity or settlements of its liabilities (or a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity's ongoing major or central operations." | Paragraph 74 of the IASB Framework states, "The definition of income encompasses both revenue and gains. Revenue arises in the course of the ordinary activities of an entity and is referred to by a variety of different names including sales, fees, interest, dividends, royalties and rent." Paragraph 7 of IAS 18 defines revenue as "the gross inflow of economic benefits during the period arising in the course of the ordinary activities of an entity when those inflows result in increases in equity, other than increases relating to contributions from equity participants." |
| Sale of goods or products | SAB Topic 13 indicates that revenue from the sale of goods or products should not be recognized until it is earned and realized, or realizable. Revenue is generally earned and realized, or realizable, when all of the following conditions have been satisfied: There is persuasive evidence of an arrangement. Delivery has occurred (e.g., an exchange has taken place). The sales price is fixed or determinable. Collectibility is reasonably assured. In addition, ASC 605-15 provides guidance on product transactions that include a right of return. Further, various industry- and transaction-specific guidance is provided in other U.S. GAAP. | Under paragraph 14 of IAS 18, revenue from the sale of goods is recognized if all of the following conditions are met: The "entity has transferred to the buyer the significant risks and rewards of ownership of the goods." The "entity retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold." The "amount of revenue can be measured reliably." "[I]t is probable that the economic benefits associated with the transaction will flow to the entity." The "costs incurred or to be incurred in respect of the transaction can be measured reliably." |
| Rendering services | >Like revenue from product sales, revenue from service transactions should not be recognized until it is earned and realized, or realizable. Revenue is generally earned and realized, or realizable, when all of the following conditions have been satisfied: There is persuasive evidence of an arrangement. Service has been rendered. The sales price is fixed or determinable. Collectibility is reasonably assured. Other than the limited guidance in >ASC 605-20, no specific guidance on the rendering of services exists under U.S. GAAP. The appropriate method for recognizing revenue in such transactions depends on the individual transaction but is usually based on the proportional performance as of the balance sheet date. | Paragraph 20 of IAS 18 states, "When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with the transaction shall be recognised by reference to the stage [i.e., percentage] of completion of the transaction at the balance sheet date." Paragraph 20 goes on to list specific conditions for determining whether an outcome of a transaction can be estimated reliably. And subsequent paragraphs provide guidance on determining the stage of completion. Paragraph 26 of IAS 18 states, "When the outcome of the transaction involving the rendering of services cannot be estimated reliably, revenue shall be recognised only to the extent of the expenses recognised that are recoverable." |
| Software arrangements | ASC 985-605 provides guidance on recognizing revenue in a software arrangement. | There is no specific guidance on software revenue recognition in IFRSs. An entity should apply the provisions of IAS 18 as appropriate. |
| Construction-type contracts | ASC 605-35 provides guidance on construction-type contracts. ASC 605-35-25-90 indicates that when the percentage-of-completion method is deemed inappropriate (e.g., when dependable estimates cause the outcome to be doubtful), the completed-contract method is preferable. ASC 605-35-25-25 through 25-27, the customer must approve the scope and price of change orders before the related revenue can be recognized. | IAS 11, Construction Contracts, provides guidance on construction-type contracts. Paragraph 32 of IAS 11 indicates that when the percentage-of-completion method is deemed inappropriate (e.g., when the outcome of the contract cannot be estimated reliably), revenue is recognized to the extent that costs have been incurred, provided that the costs are recoverable. Use of the completed-contract method is prohibited under IFRSs. Paragraph 13 of IAS 11 specifies that when it is probable that the customer will approve the scope and price of a change order, the related revenue can be recognized. |
| Milestone method | ASC 605-28 provides guidance on the application of the milestone method for recognizing revenue in research or development arrangements. | There is no specific guidance in IFRSs on the application of the milestone method for recognizing revenue in research or development arrangements. |
| Multiple-element arrangements | ASC 605-25 provides guidance on multiple-element revenue arrangements and establishes detailed criteria for determining whether each element may be separately considered for recognition. This guidance does not apply to arrangements or deliverables that are within the scope of other authoritative literature (e.g., ASC 985-605). | Paragraph 13 of IAS 18 indicates that the recognition criteria under IAS 18 are usually applied separately to each transaction unless either of the following conditions applies: "[I]t is necessary to apply the recognition criteria to the separately identifiable components of a single transaction in order to reflect the substance of the transaction." Two or more transactions "are linked in such a way that the commercial effect cannot be understood without reference to the series of transactions as a whole." |
| Bill-and-hold arrangements | The SEC staff lists specific criteria that must be met for revenue to be recognized in bill-and-hold arrangements before delivery of the product. (Non-SEC entities also use these revenue recognition criteria because no other authoritative guidance in U.S. GAAP addresses the accounting for these transactions.) The criteria restrict revenue recognition to limited circumstances. | Illustrative Examples to IAS 18 list criteria for recognizing revenue under bill-and-hold arrangements before delivery of the product. While the objective for recognizing revenue in bill-and-hold arrangements may be similar to that in U.S. GAAP, the criteria are not the same. |
| Gross versus net | ASC 605-45 provides guidance on whether to report revenue on the basis of the gross amount billed to the customer (as a principal) or the net amount retained by the company (as an agent). | Paragraph 8 of IAS 18 requires that revenue be reported on a net basis in agency relationships but does not provide specific guidance to consider. Improvements to IFRSs issued in April 2009) provides examples that indicate whether an entity is acting as a principal or as an agent. |
| Customer loyalty programs | Revenue recognition for customer loyalty programs is not specifically addressed in U.S. GAAP. (The EITF attempted to address this issue but did not reach a consensus.) Although entities account for customer loyalty programs in different ways, such programs are typically accounted for under ASC 605-25 as multiple-element arrangements or under an incremental-cost model. | IFRIC 13 indicates that customer loyalty programs are deemed multiple-element revenue transactions and that the fair value of the consideration received should be allocated between the components of the arrangement. |
| Rebates, discounts, incentives, and other consideration | ASC 605-50 indicates that consideration given by an entity to its customers is presumed to be a reduction of revenue unless an identifiable benefit whose fair value can be reasonably estimated is received. | Paragraph 10 of IAS 18 states that revenue "is measured at the fair value of the consideration received or receivable taking into account the amount of any trade discounts and volume rebates allowed by the entity." There is no specific guidance on other types of consideration given by an entity to its customers. |
| Specific industry and other guidance | Certain standards in U.S. GAAP provide specialized guidance on revenue recognition, including guidance that applies to specific industries and transactions. | IFRSs provide no (or limited) revenue recognition guidance that applies to specific industries or transactions. |
