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FAR — Revenue RecognitionQuestion 1 of 3

Under ASC 606, at which point should a company recognize revenue from a contract with a customer?

Mapped to the AICPA BlueprintCovers all 6 exam sectionsUpdated quarterlyQuestions reviewed for accuracy and exam relevance

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FAR / Financial reporting / Lesson excerpt

What is financial reporting?

Financial reporting communicates information about a business to investors, lenders, and other outside users. General-purpose financial statements serve a wide audience and follow standardized rules so readers can understand and compare the information.

View the lesson in CPAPassCPAPass lesson viewer showing an introduction to financial reporting
Check your understanding

Rawl Co. reports total assets of $500,000 and total liabilities of $320,000. What is its total stockholders’ equity?

FAR / Video lectures
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FAR / Balance sheet1 of 3

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FAR / Deferred taxes · Adapted sample

Apex Partners is a tax-exempt nonprofit that operates a commercial parking garage unrelated to its exempt purpose. The garage is subject to unrelated business income tax. Apex accrues $100,000 of warranty expense for financial reporting. For tax purposes, these costs are deductible when paid. None were paid this year. The enacted tax rate is 21%. What deferred tax asset arises from the warranty accrual, before any valuation allowance?

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FAR / Contingencies · Sample task

Evergreen Inc. / Warranty liability

Evergreen began selling refurbished containers in June 2024 with a three-year assurance-type warranty. Determine the warranty liability at December 31, 2024.

Exhibit 1 / Accounting policy

Evergreen accrues the full estimated warranty cost at the time of sale. Claims paid reduce the warranty liability. There was no opening liability and no other warranty adjustment in 2024.

Exhibit 2 / Sales and claims
Containers sold
500
Price per container
$5,000
Estimated warranty costs
2.3% of sales
Claims paid in 2024
$12,600

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