4. Under PFRS 15, when shall a franchisor recognize revenue from contingent franchise fee or revenue for a sales-based royalty? a. When the sales of the franchisee occurs. b. When the performance obligation to which some or all of the contingent franchise fees or sales- based royalty has been satisfied or partially satisfied. c. When both A and B events occur. d. When either A or B event occurs.

4. Under PFRS 15, when shall a franchisor recognize revenue from contingent franchise fee or revenue for a sales-based royalty? a. When the sales of the franchisee occurs. b. When the performance obligation to which some or all of the contingent franchise fees or sales- based royalty has been satisfied or partially satisfied. c. When both A and B events occur. d. When either A or B event occurs.

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 4C: One of the more difficult issues that companies face in recognizing revenue is determining the...

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2. When the franchisor supplies equipments and inventories without a reasonable profit, part of the initial franchise fee, sufficient to cover the estimated costs in excess of that price is * A.not recognized. B.deferred and recognized over the period the goods are likely to be sold to the franchisee C.deferred and recognized when finally sold to the franchisee D. recognized immediately
Under PFRS 15, what is the measurement basis of revenue from contracts with customers? Select the correct letter: A. Revocable amount of the consideration received or receivable B. Book value of the consideration received or receivable C. Fair value of the consideration received or receivable D. Historical cost of the consideration received or receivable
[S1] Under the current PPRS, a franchisor recognizes the initial franchise fee as revenue in full at the commencement of the franchisee's business operation if the fee is for initial services to prepare the franchisee for business. [S2] A right to access is determined as a performance obligation when the franchisor's intellectual property is expected to change over the contract period. [A] Only S1 is true, [B] Only S2 is true. [C] Both are true. [D] Both are false. ABC obtained 2 fire insurances for his commercial building. During the year, the commercial building was burned. What legal principle prohibits ABC from relaxing and just watch the commercial building burn? [A] proximate cause [B] loss minimization [C] Contribution [D] Indemnity [S1] Where there is, double insurance, the insurers are to divide the loss ratably or in the ration each policy bears to the total insurance carried. [S2] When property is insured with different insurers against the same risk and total insurance…
Under PFRS 15, when shall a consignor recognize revenue from its consignment sales? When it is probable that future economic benefits will flow to the consignor and the fair value of the revenue can be measured reliably. When the consignor receives cash remittance from the consignee. When the consignor satisfies its performance obligation under consignment contract. When the consignor enters into a consignment contract with a consignee.
(a) In your own words, explain how do we account for service costs included within a contract to lease an asset? (b) Briefly explain how a company calculates its current liability 'income tax payable'? (c) In your own words, explain why a temporary difference relating to employee benefits obligations for long-service leave creates a deferred tax asset (d) In your own words, briefly explain a 'qualifying asset' and how we report exchange rate differences relating to the acquisition of qualifying assets? Contrast this with the treatment for assets that are not qualifying assets
True or False According to PFRS 15, if an entity expects that a portion of giftcertificates sold will not be redeemed, the entity recognizes theexpected breakage amount as revenue in proportion to the pattern of rights exercised by customer
Under the new revenue recognition guidance in ASC Topic 606, which of the following statements is true regarding contracts with customer options? In some cases where customers have an option to acquire additional goods or services, an evaluation is required to determine if the option creates an additional performance obligation. An additional performance obligation is created if the customer could obtain the same rights to additional goods or services without entering the contract. An additional performance obligation is created if the option provides the customer a right to purchase the goods or services at the stand-alone selling price for those goods or services. It is generally not considered a performance obligation when a retailer grants a "customer appreciation dividend" to a customer.
Why in franchise arrangements may it be improper torecognize the entire franchise fee as revenue at the dateof sale?
Under PFRS 15, in which of the following instances will the revenue from contracts with customers be recognized at a point in time instead of over time? Group of answer choices When the entity’s performance creates or enhances an asset that the customer controls as the asset is created. When the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity performs. When the entity has transferred physical possession and legal title to the asset to the customer When the entity’s performance does not create an asset with an alternative use to the entity and the entity has an enforceable right to payment for performance completed to date.
Revenue should be recognized over time when a performance obligation is satisfied over time. That occursif (1) the customer consumes the benefit of the seller’s work as it is performed, (2) the customer controlsthe asset as the seller creates it, or (3) the asset has no alternative use to the seller and the seller can be paidfor its progress even if the customer cancels the contract
One of examples of contingent liability is an: *a. Obligations related to product warrantiesb. Possible receipt from a litigation settlementc. Pending court case with a probable favorable outcomed. Tax loss carryforwards
[S1] Instead of PFRS 17, the standard applicable to contracts that principally transfer financial risk, such as credit derivative, will be PFRS 9. [S2] If an entity gives a product warranty that has been issued directly by a manufacturer, dealer, or retailer, the standard that is likely to cover this warranty will be PFRS 9, not PFRS 17. [A] both are true [B] both are false [C] S1 is true [D] S2 is true A franchise contract involves two performance obligations to performed at points in time. Which of the following is FALSE? a stan [A] If each of the performance obligation has a stand alone price, the transaction price will be allocated to each according to their relative prices. [B] If one performance obligation does not have a stand alone price, the transaction price will be allocated first to the obligation with the stand-alone price and the remainder to the other obligation. [C] The completion of one performance obligation allows the franchisor to recognized Franchise Revenue…