New Era Network Associates has a fi ve-year license to provide networking support services to a customer. Th e total amount of the license fee to be received by New Era is $1 million. New Era recognizes license revenue on a prorated basis regardless of the time at which cash is received. How much revenue will New Era recognize for this license in each year?
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New Era Network Associates has a fi ve-year license to provide networking support services to a customer. Th e total amount of the license fee to be received by New Era is $1 million. New Era recognizes license revenue on a prorated basis regardless of the time at which cash is received. How much revenue will New Era recognize for this license in each year?
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- On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented by a note receivable collectible in 4 equal annual installments starting December 31, 20x2.The appropriate discount rate is 12%. The license provides Customer X the right to use Entity A’s patented processes. Customer X continues to operateusing its trade name and has the discretion of developing a new product name for the products it will produceusing the patented processes. The license does not explicitly require Entity A to undertake activities that willsignificantly affect the intellectual property to which Customer A has rights. Neither does Customer X expect thatEntity A will undertake such activities. Entity A grants the license to Customer X on December 31, 20x1. How muchrevenue from the franchise contract will Entity A recognize in 20x1?On December 31, 2019, Entity A enters into a contract with Customer B to transfer a license for a fixed fee of P100,000 payable as follows: • 20% is payable upon signing of contract. • 80% is represented by a note receivable collectible in 4 equal annual installments starting December 31, 2020. The appropriate discount rate is 12% (Use PV factor = 3.0375) The license provides Customer B the right to use Entity A's patented processes. Customer B continues to operate using its trade name and has the discretion of developing a new product name for the products it will produce using the patented processes. The license does not explicitly require Entity A to undertake activities that will significantly affect the intellectual property to which Customer C has rights. Neither does Customer B expect that Entity A will undertake such activities. Entity A grants the license to Customer B on December 31, 2019. How much revenue from the franchise contract will Entity A recognize in 2019?On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented by a note receivable collectible in 4 equal annual installments starting December 31, 20x2.The appropriate discount rate is 12%. The license provides Customer X the right to use Entity A’s patented processes. The agreement requires CustomerX to discontinue using its trade name and instead use Entity A’s trade name. Customer X is bound by the terms ofthe contract to abide with Entity A’s policies on the use of the processes but is given the right to any subsequentmodifications to the processes. How much revenue from the franchise contract will Entity A recognize in 20x1?
- Company A provides a bundled service offering to Customer B. It charges Customer B $800,000 for initial connection to its network and two ongoing services - access to the network for 1 year and 'on-call troubleshooting' advice for that year. Customer B pays the $800,000 upfront, on 1 July 2020. Company A determines that, if it were to charge a separate fee for each service if sold separately, the fee would be: Connection fee Access fee Troubleshooting Paragraph $400,000 Lato (Recomm... v $500,000 The end of Company A's reporting period is 30 June 2021. Required Prepare the journal entries to record this transaction in accordance with AASB 15 for 1 July 2020 and the year ended 30 June 2021, assuming Company A applies the relative fair value approach. (Show all workings). $400,000 BI U A/ 19px (... ✓ EQ DC X MOn January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license. The initial franchise fee is P200,000, payable as follows: 20% cash down payment upon signing of the contract, and the balance is payable in four (4) equal annual installments starting December 31, 20X1. The appropriate discount rate is 10%. The contract also requires Marc Company to transfer equipment to the customer. The equipment has a cost of P30,000 and a stand-alone selling price of P50,000. The license has a stand-alone selling price of P38,000. Marc Company regularly sells the license and the equipment separately. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. REQUIRED: Compute the following: 1. Total transaction price 2. Transaction price allocated to license 3. Transaction price allocated to equipment 4. Franchise fee revenueOn January 1, 20x1, Marc Company enters into a contract with a customer to transfer a license. The initial franchise fee is P200,000, payable as follows: 20% cash down payment upon signing of the contract, and the balance is payable in four (4) equal annual installments starting December 31, 20X1. The appropriate discount rate is 10%. The contract also requires Marc Company to transfer equipment to the customer. The equipment has a cost of P30,000 and a stand-alone selling price of P50,000. The license has a stand-alone selling price of P38,000. Marc Company regularly sells the license and the equipment separately. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. REQUIRED: Total transaction price Transaction price allocated to license Transaction price allocated to equipment Franchise fee revenue
- On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: -20% is payable upon signing of contract. -80% is represented by a note receivable collectible in 4 equal annual installments starting December 31, 20x2. The appropriate discount rate is 12%. Case #2:The license provides Customer X the right to use Entity A’s patented processes. The agreement requires CustomerX to discontinue using its trade name and instead use Entity A’s trade name. Customer X is bound by the terms ofthe contract to abide with Entity A’s policies on the use of the processes but is given the right to any subsequentmodifications to the processes. How much revenue from the franchise contract will Entity A recognize in 20x1?On December 31, 20x1, Entity A enters into a contract with Customer X to transfer a license for a fixed fee of₱100,000 payable as follows: -20% is payable upon signing of contract. -80% is represented by a note receivable collectible in 4 equal annual installments starting December 31, 20x2. The appropriate discount rate is 12%. Case #1:The license provides Customer X the right to use Entity A’s patented processes. Customer X continues to operateusing its trade name and has the discretion of developing a new product name for the products it will produceusing the patented processes. The license does not explicitly require Entity A to undertake activities that willsignificantly affect the intellectual property to which Customer A has rights. Neither does Customer X expect thatEntity A will undertake such activities. Entity A grants the license to Customer X on December 31, 20x1. How muchrevenue from the franchise contract will Entity A recognize in 20x1? Case #2:The license provides…AAA Company sells gift certificates that expire one year after their issuance. Information on gift certificates is shown below: Unearned revenue – gift certificates, January 1, 2020 - 600,000Gift certificates sold during 2019 - 1,000,000Prior year gift certificates redeemed in 2020 - 400,000Gift certificates sold and redeemed in 2020 - 700,000 How much is the unearned revenue from gift certificates as of December 31, 2020?
- Value Dealership Inc. markets and sells the vehicles to retail customers. Along with a new vehicle purchase, a customer will receive a free annual maintenance contract for one year from the date of purchase. The standalone selling price of a vehicle is $30,000 and the standalone selling price for the annual maintenance contract is $500. During October 2020, Value Dealership Inc. sold 72 vehicles for $30,250 per vehicle, each with a free annual maintenance contract. Note: Carry all decimals in calculations; round the final answer to the nearest dollar. a.) Ignoring the cost entries, record the journal entry in October 2020 for Value Dealership’s sale of vehicles with the associated maintenance contracts to customers. b.) Assume the same information above except that the standalone selling price of the annual maintenance contract is not known because this was the first time Value Dealership offered the service. Value Dealership is uncertain as to what services, on average, a customer…Engelhart Company licenses customer relationship software to Kristin Incorporated for 3 years. In addition to providing the software, Engelhart promises to provide consulting services over the life of the license to maintain operability within Kristin?s computer system. The total transaction is $210,000. Based on the standalone values, Engelhart estimates the consulting services have a value of $75,000 and the software license has a value of $135,000. Upon install on July 1, 2019, Kristin pays Engelhart $100,000; the balance of the contract is due December 31, 2019. Explain how you would account and determine the revenue for 2019, assuming (a) the performance obligations are interdependent and (b) the performance obligations are not interdependent.On January 1, 20x1, Sunbathe Co. enters into a contract with a customer to transfer a license. The initial franchise fee is P100,000 payable as follows: 20% cash down payment upon signing of the contract and the balance is payable in 4 equal annual installments starting December 31, 20x1. The appropriate discount rate is 12%. The contract states that the initial franchise fee consists of P30,000 consideration for the equipment that Sunbathe Co. will transfer to the customer and the P70,000 balance for the franchise rights. • Sunbathe Co. regularly sells the equipment and the license separately. The stand-alone selling prices are P40,000 for the equipment and P38,000 for the license. The license provides the customer the "right to use" Sunbathe's intellectual property as it exists at the point in time at which the license is granted. The equipment is transferred to the customer on January 15, 20x1, while the license is transferred to the customer on February 1, 20x1. Provide journal…