Barrios Communications is a provider of satellite television services. It will install a satellite dish free of charge for any customer that agrees to a one-year service contract at a price of $50 per month. Installation costs Barrios $150. Customers typically remain with Barrios for much longer than the one year required, an average of 10 years (i.e., 9 years beyond their contractual obligation). Barrios enters into a contract under the terms described above on January 1, 20X1. Required: What amount of revenue should Barrios record related to the contract in 20X1? What amount of expense related to the contract should Barrios record related to the contract in 20X1?

Barrios Communications is a provider of satellite television services. It will install a satellite dish free of charge for any customer that agrees to a one-year service contract at a price of $50 per month. Installation costs Barrios $150. Customers typically remain with Barrios for much longer than the one year required, an average of 10 years (i.e., 9 years beyond their contractual obligation). Barrios enters into a contract under the terms described above on January 1, 20X1. Required: What amount of revenue should Barrios record related to the contract in 20X1? What amount of expense related to the contract should Barrios record related to the contract in 20X1?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 7C: On January 1, 2019, Mopps Corp. agrees to provide Conklin Company 3 years of cleaning and janitorial...

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Barrios Communications is a provider of satellite television services. It will install a satellite dish free of charge for any customer that agrees to a one-year service contract at a price of $50 per month. Installation costs Barrios $150. Customers typically remain with Barrios for much longer than the one year required, an average of 10 years (i.e., 9 years beyond their contractual obligation). Barrios enters into a contract under the terms described above on January 1, 20X1. Required: 1. What amount of revenue should Barrios record related to the contract in 20X1? 2. What amount of expense related to the contract should Barrios record related to the contract in 20X1?
Sirius XM Holdings Incorporated sells a dash-top satellite radio receiver and one-year subscription for a total price of $80. By purchasing this deal, the subscriber is entitled to receive hardware (i.e., the radio), a software update that is automatically downloaded every second month to the radio, and continuous music service for one year from the date the hardware is delivered.Required:Identify the performance obligation(s) in this contract, and indicate whether the revenue should be recognized at a Point in time or Over time for each identified performance obligation. If the Performance Obligation is "No", then mark the Revenue recognized column with "Not affected".
AB leases 100 desk phones for use in one of its offices. The contract term states that there will be an annual rental payment of R9 000 for eight years. The lease arrangement begins on 1 July 20x0. As an incentive to AB, no payment is required in the first year. The desk phones are to be classified as low-value items.Prepare the correct debit or credit entry that would be required in Entity AB’s income statement for the year ended 30 June 20x1 in respect of the above transaction.
SmaGlo, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1,20x7. In line with the contract, Kim Dorothy subscribes for SmaGlo's monthly plan for 12 months and in retum Kim Dorothy receives a free Apple I-Phone handset from SmaGlo. Kim Dorothy will pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. Allocate the transaction price to the performance obligations: the allocated transaction price to each performance obligations? answer is P11,520 network service and P2,880 for Apple I-Phone Handset provide solution
Pacific Crossburgers Inc. charges an initial franchise fee of $70,000. Upon the signing of the agreement (which covers 3 years), a payment of $28,000 is due. Thereafter, three annual payments of $14,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 10% to borrow money. The franchise agreement is signed on May 1, 2020, and the franchise commences operation on July 1, 2020. Instructions Prepare the journal entries in 2020 for the franchisor under the following assumptions. (Round to the nearest dollar.) a. No future services are required by the franchisor once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c. The total franchise fee includes training services (with a value of $2,400) for the period leading up to the franchise opening and for 2 months following opening.
Universal Leasing leases electronic equipment to a variety of businesses. The company’s primary service is providing alternate financing by acquiring equipment and leasing it to customers under long-term sales-type leases. Universal earns interest under these arrangements at a 10% annual rate. The company leased an electronic typesetting machine it purchased for $30,900 to a local publisher, Desktop Inc., on December 31, 2020. The lease contract specified annual payments of $8,000 beginning January 1, 2021, the beginning of the lease, and each December 31 through 2022 (three-year lease term). The publisher had the option to purchase the machine on December 30, 2023, the end of the lease term, for $12,000 when it was expected to have a residual value of $16,000, a sufficient difference that exercise seems reasonably certain.Required:1. Show how Universal calculated the $8,000 annual lease payments for this sales-type lease.2. Prepare an amortization schedule that describes the pattern…
HERE Inc, a telecommunications operator, entered into a contract with Mr. X on March 1, 20x7. In line with the contract, Mr. X subscribes for HERE’s monthly plan for 12 months and in return Mr. X receives a free cellphone from HERE. Mr. X will pay a monthly fee or P5,000. Mr. X gets the handset immediately after the contract signing.Here sells the same handset for P26,000 and the same monthly plans for P3,250 per month without the handset. Determine the revenue to be recognized by HERE on April 30, 20x7.
HERE Inc, a telecommunications operator, entered into a contract with Mr. X on March 1, 20x7. In line with the contract, Mr. X subscribes for HERE’s monthly plan for 12 months and in return Mr. X receives a free cellphone from HERE. Mr. X will pay a monthly fee or P5,000. Mr. X gets the handset immediately after the contract signing.Here sells the same handset for P26,000 and the same monthly plans for P3,250 per month without the handset. Determine the revenue to be recognized by HERE on March 31, 20x7.
Pina Universe charges an initial franchise fee of $ 234,000. Upon the signing of the agreement, a payment of $ 26,000 is due. Thereafter, 5 annual payments of $ 41,600 are required. The credit rating of the franchisee is such that it would have to pay interest at 9% to borrow money. The franchise agreement is signed on August 1, 2020, and the franchise commences operation on October 1, 2020. Prepare the journal entries in 2020 for the franchisor under the following assumptions. a. No future services are required by the franchisee once the franchise starts operations. b. The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise. c. The total franchise fee includes training services (with a value of $ 6,900) for the period leading up to the franchise opening and for 2 months following opening
SmaGlo, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1,20x7. In line with the contract, Kim Dorothy subscribes for SmaGlo's monthly plan for 12 months and in retum Kim Dorothy receives a free Apple I-Phone handset from SmaGlo. Kim Dorothy will pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. SmaGlo sells the same handsets for P2,400 and the same monthly plans for P800 per month without handset. 9. On March 31, 20x7, the revenue from network services amounted to: Answer is 960. Provide solution
SmaGlo, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1,20x7. In line with the contract, Kim Dorothy subscribes for SmaGlo's monthly plan for 12 months and in retum Kim Dorothy receives a free Apple I-Phone handset from SmaGlo. Kim Dorothy will pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. SmaGlo sells the same handsets for P2,400 and the same monthly plans for P800 per month without handset. On March 31,20x7, the amount of accounts receivable to be recorded Answer is 1,200. Provide the solution
SmaGlo, Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1,20x7. In line with the contract, Kim Dorothy subscribes for SmaGlo's monthly plan for 12 months and in retum Kim Dorothy receives a free Apple I-Phone handset from SmaGlo. Kim Dorothy will pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. SmaGlo sells the same handsets for P2,400 and the same monthly plans for P800 per month without handset. On March 31,20x7, the amount of accounts receivable to be recorded A. 1,200 B. None