Taylor Construction Inc. signed a contract with FSU to build a student residential building with two million dollars by 2021 August; FSU can only pay 1.8 million dollars if Taylor cannot complete the construction by September 1. According to the consideration of the four transaction price types, which type is for the following transaction?
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Taylor Construction Inc. signed a contract with FSU to build a student residential building with two million dollars by 2021 August; FSU can only pay 1.8 million dollars if Taylor cannot complete the construction by September 1. According to the consideration of the four transaction price types, which type is for the following transaction?
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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, 2020, Gordon Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $3,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Gordon identifies two performance obligations and allocates $1,200 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $700; the shelves have a cost of $320. Instructions a. Prepare the journal entry on January 1, 2020, for Gordon. b. Prepare the journal entry on February 5, 2020, for Gordon when the wiring base is delivered to the customer. c. Prepare the journal entry on February 25, 2020, for Gordon when the shelving unit is delivered to the customer and Gordon receives full payment.On March 1, 2021, AST Corporation contracted to build two buildings for a total contract price ofP27M. The contract specifies that payment will only occur after both buildings have beencompleted and transferred to the client. The stand-alone selling price of the Building No. 1 is20M and Building No. 2 is P10M. On December 1, 2022, Building No. 1 was completed andtransferred, the journal entry to record this transaction include a debit to: *Contract asset, P18MCost of construction, P18MAccount receivable, P20MContract asset, P20M
- On June 30, 2021, Kimberly Farms purchased custom-made harvesting equipment from a local producer. In payment, Kimberly signed a noninterest-bearing note requiring the payment of $60,000 in two years. The fair value of the equipment is not known, but an 8% interest rate properly reflects the time value of money for this type of loan agreement. At what amount will Kimberly initially value the equipment? How much interest expense will Kimberly recognize in its income statement for this note for the year ended December 31, 2021?Cass Company enters into a contract with Dearborn Inc. to sell it $50,000 of goods with delivery on May 10, 2019. Cass manufactured the goods at a cost of $33,000. The contract is signed on April 15, 2019, at which time Dearborn pays Cass $25,000. Cass delivers the goods on May 10, 2019, and Dearborn pays the final $25,000 on that date. Required: 1. What is the transaction price? 2. Prepare Cass’s journal entries related to the contract with Dearborn.Answer the following questions. a. On May 1, 2020, Goldberg Company sold some machinery to Newlin Company on an installment contract basis. The contract required five equal annual payments, with the first payment due on May 1, 2020. What present value concept is appropriate for this situation? b. On June 1, 2020, Seymour Inc. purchased a new machine that it does not have to pay for until June 1, 2022. The total payment on June 1, 2022, will include both principal and interest. Assuming interest at a 12% rate, the cost of the machine would be the total payment multiplied by what time value of money concept? c. Costner Inc. wishes to know how much money it will have available in 5 years if five equal amounts of $35,000 are invested, with the first amount invested immediately. What interest table is appropriate for this situation? d. Megan Hoffman invests in a “jumbo” $200,000, 3-year certificate of deposit at First Wisconsin Bank. What table would be used to determine the…
- Sunshine offers a contract to Cape Country Club, which is comprised of 10 patio set plus installation for a price of $2,850 each. On a standalone basis, the patio sets sell for $2,400 (cost $1,410), and Sunshine estimates that the fair value of the installation service (based on cost-plus estimation) is $600. The contract was signed on March 21, 2024, and the Country Club paid the contract price in cash. The patio sets were installed on April 30, 2024. a) Describe the performance obligations. b) Show the calculations for the transaction price and allocation of the transaction price to the performance obligations. c) Prepare journal entries for Sunshine for March and April 2024. March 21 April 30On January 1, 2025, Cullumber Co. enters into a contract to sell a customer a wiring base and shelving unit that sits on the base in exchange for $5,000. The contract requires delivery of the base first but states that payment for the base will not be made until the shelving unit is delivered. Cullumber identifies two performance obligations and allocates $1,750 of the transaction price to the wiring base and the remainder to the shelving unit. The cost of the wiring base is $850; the shelves have a cost of $490. (a) Prepare the journal entry on January 1, 2025, for Cullumber. (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 debit entry before credit entry.) Date January 1, 2025 Account Titles and Explanation eTextbook and Media List of Accounts Debit CreditLuke consulting enters into a contract with Holand University to restructure Holand's process for purchasing goods from suppliers. The contract states that Luke will earn a fixed fee of P25,000and earn an additional P10,000 if Holand achieves P10,000 of cost savings. Luke determines the transaction price as the expected value of expected consideration, what transsaction price will Luke estimate for this contract?
- ZEN Ltd signs a contract on 30 June 2019, agreeing to build a bridge for XYN at a contract price of $20 million. XYN will be in control of the asset throughout the construction process. ZEN estimates that construction costs will be as follows: Year Ending 30th June 2020 Cost $ 5,000,000 $ 8,000,000 $ 3,000,000 $16,000,000 30th June 2021 30th June 2022 Total The contract provides that XYN will make payments on 30 June of each year as follows: $ 4,000,000 $ 10,000,000 $ 6,000,000 $20,000,000 2020 2021 2022 Total The contract is completed as expected on 30 June 2022. Assume that actual costs and cash collections with expectations and that cost (an input measure) is used as the basis for assessing progress on the car contract. Required: (a) Calculate the income and gross profit recognised each year 2020, 2021, 2022. (b) Prepare the journal entries for the year ended 30th June 2020.On January 1, 2018, DMCI Company started the construction of a building at a fixed contract price of P1,000,000. On the same date, the customer paid a mobilization fee equal to 5% of contract price that will be deductible from the first billing. The outcome of construction contract cannot be estimated reliably During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019, the entity billed again the customer amounting to 20% of the contract price. During 2020, the entity billed again the customer amounting to 40% of the contract price. The remaining billing was made at the year of completion of the project. The entity made collection from the customer at the end of 2018, 2019 and 2020, in the amount of P120,000, P450,000 and P180,000, respectively. The entity provided the following data concerning the direct costs related to the said project: 2018 2019 2020 Cumulative costs incurred at year-end 360,000 800,000 870,000…On January 1, 2018, DMCI Company started the construction of a building at a fixed contract price of P1,000,000. On the same date, the customer paid a mobilization fee equal to 5% of contract price that will be deductible from the first billing. The outcome of construction contract cannot be estimated reliably During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019, the entity billed again the customer amounting to 20% of the contract price. During 2020, the entity billed again the customer amounting to 40% of the contract price. The remaining billing was made at the year of completion of the project. The entity made collection from the customer at the end of 2018, 2019 and 2020, in the amount of P120,000, P450,000 and P180,000, respectively. The entity provided the following data concerning the direct costs related to the said project: 2018 2019 2020 Cumulative costs incurred at year-end 360,000 800,000 870,000…