Careful Company sells goods that cost P600,000 to a customer for P800,000 on December 20, 2021. The sales price includes an installation fee, which is valued at P80,000. The fair value of the goods is P740,000. The installation is considered a separate performance obligation and is expected to take 3 months to complete. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021 and 2022?
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- On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial services. The contract sets the price at 12,000 per year, which is the normal standalone price that Mopps charges. On December 31, 2020, Mopps and Conklin agree to modify the contract. Mopps reduces the fee for the third year to 10,000, and Conklin agrees to a 4-year extension that will extend services through December 31, 2024, at a price of 15,000 per year. At the time that the contract is modified, Mopps is charging other customers 13,500 for the cleaning and janitorial service. Required: Should Mopps and Conklin treat the modification as a separate contract? If so how should Mopps account for the contract modification on December 31, 2020? Support your opinion by discussing the application to this case of the factors that need to be considered for determining the accounting for contract modifications.On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.
- Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022. *How many performance obligations are there in the contract? *How much is the revenue to be recognized in 2021? *How much is the revenue to be recognized in 2022?Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?Beautiful Company sold a set of washing machine and a dryer for a total contract price of P100,000 on December 15, 2021. The stand-alone selling prices of the washing machine and the dryer if sold separately are: 150,000 and 70,000, respectively. The washing machine was delivered on December 20, 2021 but the dryer was delivered only on January 5, 2022.1. How many performance obligations are there in the contract? 2. Use the same information in Number 5, how much is the revenue to be recognized in 2021? 3. Use the same information in Number 5, how much is the revenue to be recognized in 2022?
- Sarasota Company sells goods that cost $324,000 to Ricard Company for $442,800 on January 2, 2025. The sales price includes an installation fee, which has a stand-alone selling price of $43,200. The standalone selling price of the goods is $399,600. The installation is considered a separate performance obligation and is expected to take 6 months to complete (installation was completed on June 18, 2025). (a) How much revenue does Sarasota record on January 2, 2025? Revenue $A company entered into a contract with one of the customer to supply a sophisticated machinery for 200,000 on 01/07/2020. The Contract is coming with selling a machinery, 3 years maintenance and a one-year replacement guarantee. The stand-alone selling price of machinery is 120,000, the replacement guarantee costs 10,000 and free services expected to costs the company 20,000. As per the terms of sales, the customer may pay to the firm either on 01/01/2020- 200,000, 01/03/2020- 210,000 or 01/05/2020- 225,000. As per past experience there is high probability that the customer pays on 01/05/2020. You are required to write necessary treatments per IFRS 15. Also show the net effect of this transaction on the financial statements of the firm.A company enters into a contract to build a factory for a customer. The agreed price is P2M and the specified completion date is 31 October 2019. However, the contract provides that the company should receive an incentive payment of a further P250,000 if the factory is completed by 30 September 2019. Similarly, the price will be reduced by P250,000 if the factory The company estimates that there is a 15% probability that the factory will be completed by 30 September 2019, an 80% probability that it will be completed in October 2019 or November 2019 and a 5% probability that it will not be completed until after 30 November is not completed until after 30 November 2019. 2019. 20. What is the expected value of the transaction price for this contract? a. P2M C. P1.975M b. P2.125M d. P2.025M
- Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2020. The sales price includes an installation fee, which has a standalone selling price of $40,000. The standalone selling price of the goods is $370,000. The installation is considered a separate performance obligation and is expected to take 6 months to complete. Instructions a. Prepare the journal entries (if any) to record the sale on January 2, 2020. b. Shaw prepares an income statement for the first quarter of 2020, ending on March 31, 2020 (installation was completed on June 18, 2020). How much revenue should Shaw recognize related to its sale to Ricard?On May 10, 2025, Cullumber Co. enters into a contract to deliver a product to Oriole Inc. on June 15, 2025. Oriole agrees to pay the full contract price of $1,980 on July 15, 2025. The cost of the goods is $1,280. Cullumber delivers the product to Oriole on June 15, 2025, and receives payment on July 15, 2025. Prepare the journal entries for Cullumber related to this contract. Either party may terminate the contract without compensation until one of the parties performs. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit SICullumber Company sells goods on credit that cost $306,500 to Gary Company for $400,500 on January 2, 2025. The sales price includes an installation fee, which has a standalone selling price of $47,000. The standalone selling price of the goods is $353,500. The installation is considered a separate performance obligation and is expected to take 6 months to complete. (a) Prepare the journal entries (if any) to record the sale on January 2, 2025. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Jan. 2, 2025 Account Titles and Explanation Debit Credit
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