Chapter 5 solutions manual

It is a tiny project where we don't do too much coding yet but we cooperate together to finish some tricky exercises from famous RL book Reinforcement Learning, An Introduction by Sutton. You may know that this book, especially the second version which was published last year, has no official solution manual. If you send your answer to the email address that the author leaved, you will be returned a fake answer sheet that is incomplete and old.

So, why don't we write our own? Most of problems are mathematical proof in which one can learn the therotical backbone nicely but some of them are quite challenging coding problems. Both of them will be updated gradually but math will go first. Main author would be me and current main cooperater is Jean Wissam Dupin , and before was Zhiqi Pan quitted now. Don't even expect the solutions be perfect, there are always mistakes.

Especially in Chapter 3, where my mind was in a rush there. And, sometimes the problems are just open. Show your ideas and question them in 'issues' at any time! They are tricker than other exercises and I will update them little bit later.

Please share your ideas by opening issues if you already hold a valid solution. That means I am doing leetcode-ish stuff every day.

I will try to finish it in FEB As far, I have finished up to Ex But because later half is even more challenging tedious when it is related to many infiite sums , I would release the final version little bit later. One might have to read the referenced link to Sutton's paper in order to understand some part. Espeically how and why Emphatic-TD works. So after uploading the Chapter 9 pdf and I really do think I should go back to previous chapters to complete those programming practices.

It is a substantial complement to Chapter 9. Still many open problems which are very interesting. Finished without programming. Plan on creating additional exercises to this Chapter because many materials are lack of practice. In that case, revenue would be delayed until the later part was delivered.

Brief Exercise 5—13 Orange has separate sales prices for the two parts of LearnIt-Plus, so the company can base its estimates of the fair value of those parts according to their relative selling prices. If LearnIt were not sold separately, the accounting would be the same. A key to these conditions is the concept of substantial performance.

Often, substantial performance is considered to have occurred when the franchise opens for business. Continuing franchise fees are recognized over time as the services are performed. Commercial substance. Each party to the contract has approved the contract and is committed to satisfying their respective obligations. Payment terms. The terms and manner of payment are specified. A contract does not exist if either party can terminate a wholly unperformed contract without penalty.

The Richter agreement does not satisfy characteristic number 4, and may not satisfy characteristics 3 and 5 as well. Therefore, it does not qualify as a contract for purposes of recognizing revenue. Brief Exercise 5—20 Yes, these are separate performance obligations, because each good is sold separately to individual customers. Brief Exercise 5—21 Yes, they are separate.

The renewal option is a material right because it allows the customer to renew at a better price than could be obtained without the right. The customer receives and consumes a benefit as the seller performs the service. Therefore, criterion 2b is satisfied. Revenue should be recognized as it is earned, in this case as the services are provided during the ski season. Requirement 2 November 6, Cash That determination affects whether the seller recognizes revenue in the amount of consideration received in exchange for those goods or services if principal or in the amount of any fee or commission received in exchange for arranging for the other party to provide the goods or services if agent.

Requirement 1 AuctionCo is a principal because it obtained control of the used bicycle before the bicycle was sold. Requirement 2 AuctionCo is an agent because it never controlled the product before it was sold. Requirement 3 In this case it appears that AuctionCo is acting as an agent, given that the bicycles are shipped directly from the owner to the customer.

However, additional aspects of the arrangement could make it more appropriate to treat AuctionCo as a principal. April 1, Cash The specific citation for each of the following items is: 1. Contracts executed by the parties normally include provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged, and the manner and terms of settlement.

The buyer can be expected to satisfy all obligations under the contract. The contractor can be expected to perform all contractual obligations. Inventory turnover a. Net income divided by net sales. Return on assets b. Defers recognition until cash collected equals cost. Return on shareholders' equity c.

Defers recognition until project is complete. Profit margin on sales d. Net income divided by assets. Cost recovery method e. Risks and rewards of ownership retained by seller. Percentage-of-completion method f. Contra account to construction in progress. Completed contract method g. Net income divided by shareholders' equity. Asset turnover h. Cost of goods sold divided by inventory. Receivables turnover i. Recognition is in proportion to work completed. Right of return j.

Recognition is in proportion to cash received. Billings on construction contract k. Net sales divided by assets. Installment sales method l. Net sales divided by accounts receivable.

Consignment sales m. Could cause the deferral of revenue recognition beyond delivery point. In general, the higher the inventory turnover, the lower the investment must be for a given level of sales. It indicates how well inventory levels are managed and the quality of inventory, including the existence of obsolete or overpriced inventory. However, to evaluate the adequacy of this ratio it should be compared with some norm such as the industry average.

That indicates whether inventory management practices are in line with the competition. Other points of reference should be considered. For instance, a high turnover can be achieved by maintaining too low inventory levels and restocking only when absolutely necessary.

This can be costly in terms of stockout costs. The ratio also can be useful when assessing the current ratio. The more liquid inventory is, the lower the norm should be against which the current ratio should be compared. The asset turnover ratio also is slightly better than the industry average 2 times per year versus 1. These ratios indicate that Anderson is able to generate more sales per dollar invested in inventory and in total assets than the industry averages.

However, Anderson takes slightly longer to collect its accounts receivable That right to receive a discount could be sold separately. Therefore, the discount voucher given by Clarks is a separate performance obligation. Therefore, the annual fee is viewed as a prepayment for future delivery of goods or services, and would be recognized as unearned revenue when received. Requirement 2 The delivery of newspapers meets the criteria for a separate performance obligation, because it is regularly sold separately.

The coupon for a 40 percent discount on a carriage ride is a separate performance obligation. First, it is an option that conveys a material right to the recipient as opposed to just a general marketing offer. Second, it meets the criteria for a separate performance obligation because the recipient could use it in combination with additional cash to enjoy a carriage ride.

Requirement 4 Upon receiving the subscription fee, the journal entry should be: Cash Unearned Revenue, subscription The license does not provide utility on its own or together with other goods or services that HealthPro has received previously from Pfizer or that are available from other entities.

Requirement 3 Given that the outcome is binary Thomas either will receive the bonus or not , the most likely amount often would be preferred. However, both amounts can be justified theoretically. The probability-weighted amount is an expected value, and thus over all such contracts is the best estimate of the average amount that will be received. Even if Seneca could predict that amount with some accuracy, it would not be able to recognize revenue associated with the bonus because that amount would not be reasonably assured until after year-end.

Record the first quarterly payment. Cash or accounts receivable , Revenue , 2. Record the amount of additional revenue at the end of year.

Consider the following indicators: 1. The buyer has an unconditional obligation to pay. A customer is unconditionally obliged to pay for a good or service typically because the customer has obtained control of the good or service in exchange and the passage of time does not remove the obligation. The buyer has the legal title. Legal title often indicates which party has the ability to direct the use of, and receive the benefit from, a good or service. The facts do not state whether title transfers.

The customer has physical possession and control of goods. The buyer has the risks and rewards of owndership. The earnings process is completed upon delivery of the product. The payment terms do not affect revenue recognition. Year of sale a. Construction-in-progress represents the costs incurred plus the cumulative pro-rata share of gross profit under the percentage-of-completion method of accounting.

Under the cost recovery approach, an amount of revenue is recognized that is equal to cost incurred, so long as cost incurred is probable to be recovered. IFRS does not provide extensive guidance determining how contracts are to be separated into components for purposes of revenue recognition.

IFRS recognizes interim expenses more discretely than does U. GAAP, such that the expense is recognized in the period in which it occurs rather than being accrued as a prepaid expense asset when an amount is paid and then amortized to expense over the year. Under U. CMA Exam Questions 1. Revenue is recognized when 1 realized or realizable and 2 earned. The revenue was earned on May 28 when the title of the goods passed to the purchaser. The cost- recovery method is not used because the receivable was not deemed uncollectible until June Revenue is normally recorded at the time of the sale or, occasionally, at the time cash is collected.

However, sometimes neither the sales basis nor the cash basis is appropriate, such as when a construction contract extends over several accounting periods. As a result, contractors ordinarily recognize revenue using the percentage-of-completion method so that some revenue is recognized each year over the life of the contract.

Hence, this method is an exception to the general practice of recognizing revenue at the point of sale, primarily because it better matches revenues and expenses. Bluebird: Job completed in , so down payment made in , another payment in , and two payments remain.

PitStop: Job completed in , so down payment made in , another payment in , another in , and one payment remains. It is true that the installment sales method recognizes gross profit faster than does the cost recovery method, but the installment sales method also recognizes gross profit more evenly than does the cost recovery method. The timing of these jobs is such that is a year in which almost all of the gross profit associated with the PitStop job gets recognized, so looks more profitable under the cost recovery method.

The share is estimated based on the project's costs incurred each period as a percentage of the project's total estimated costs. The completed contract method should only be used when a lack of dependable estimates or inherent hazards make it difficult to forecast future costs and profits.

Gross profit recognition: Under the completed contract method Citation would not report gross profit until the project is competed.

Citation would have to report an overall gross loss on the contract in whatever period it first revises the estimates to determine that an overall loss will eventually occur. Citation never estimates the Altamont contract will earn a gross loss, so never has to recognize one.

Under the completed contract method Citation would not report any revenue in the or income statements. This is equivalent to the completed contract method for long-term contracts. The percentage-of-completion method is not appropriate in this case.

There is no contract in place and until the completion of the home, the transfer of title, and the receipt of the full sales price, the earnings process is not virtually complete and there is still significant uncertainty as to cash collection.

Also, the sales price is not fixed. January 30, Cash September 1, Unearned franchise fee revenue September 1, Deferred franchise fee revenue Problem 5—11 1. DuPont framework 3. Requirement 3 Profitability can be achieved by a high profit margin, high turnover, or a combination of the two. Requirement 2 Profitability can be achieved by a high profit margin, high turnover, or a combination of the two. Both firms do this. Explain the recording of 19, 20 10, 11, 12 15, 16, 17, 5A, 6A, 7A 5B, 6B, 7B purchases and sales of 18, 19 inventory under a periodic inventory system.

Prepare a worksheet for 21 13 20, 21 8A a merchandising company. Simple 30—40 3A Prepare financial statements and adjusting and Moderate 40—50 closing entries.

Moderate 50—60 1B Journalize purchase and sales transactions under Simple 20—30 a perpetual inventory system. Simple 30—40 3B Prepare financial statements and adjusting and Moderate 40—50 closing entries. Prepare a worksheet for Q E PA a merchandising company. The steps in the accounting cycle are the same for both a merchandising company and a service company.

In both types of companies, net income or loss results from the matching of expenses with revenues. The normal operating cycle for a merchandising company is likely to be longer than in a service company because inventory must first be purchased and sold, and then the receivables must be collected. Income measurement for a merchandising company differs from a service company as follows: a sales are the primary source of revenue and b expenses are divided into two main categories: cost of goods sold and operating expenses.

In a perpetual inventory system, cost of goods sold is determined each time a sale occurs. FOB shipping point means that goods are placed free on board the carrier by the seller. The buyer then pays the freight and debits Merchandise Inventory. Thus, the seller pays the freight and debits Freight-out. In accordance with the revenue recognition principle, sales revenues are generally con- sidered to be earned when the goods are transferred from the seller to the buyer; that is, when the exchange transaction occurs.

The earning of revenue is not dependent on the collection of credit sales. XX Sales XX Cost of Goods Sold XX Merchandise Inventory XX Credit sales— Accounts Receivable XX The perpetual inventory records for merchandise inventory may be incorrect due to a variety of causes such as recording errors, theft, or waste. Two closing entries are required: 1 Sales Of the merchandising accounts, only Merchandise Inventory will appear in the post-closing trial balance.

Sales revenues Gross profit There are three distinguishing features in the income statement of a merchandising company: 1 a sales revenues section, 2 a cost of goods sold section, and 3 gross profit.

W, Less: Purchase returns and allowances W11, Purchase discounts W, Net purchases W, Add: Freight-in W, Beginning inventory For a merchandising company, sales less cost of goods sold is called gross profit. The operating cycle of a merchandising company differs from that of a service company.

The operating cycle of a merchandising company is ordinarily longer. In a periodic inventory system, no detailed inventory records of goods on hand are maintained.

A perpetual inventory system provides better control over inven- tories than a periodic system. Sales Returns and Allowances Sales Discounts Merchandise Inventory