3. What is the contract revenue for 2021?a. 180,000b. 360,000c. 300,000d. 120,0004. What is the contract revenue for 2022?a. 240,000b. 360,000c. 180,000d. The past experience is that, of the total pesos spent forProblem 1-20 (AICPA Adapted)repairs on service contracts, 40% is incurred evenly duringDunne Company sells equipment service contracts that covera two-year period. The sale price of each contract is P600The past experience is that, of the total pesos spent forthe first contract year and 60% evenly during the secondcontract year.The entity sold 1,000 contracts evenly throughout 2020.1. What is the contract revenue for 2020?a. 120,000b. 240,000c. 300,000d. 150,000

Formula: Total revenue = Sales units x Sale price per unit

Answered: a two-year period. The sale price of…

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 9MC

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Similar questions

Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
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.
Steele Corp. purchases equipment for $25,000. Regarding the purchase, Steele recorded the following transactions: Paid shipping of $1,000 Paid installation fees of $2,000 Pays annual maintenance cost of $200 Received a 5% discount on $25,000 sales price Determine the acquisition cost of the equipment.
Yankee Corp. agrees to provide Albany Company 24 months of coaching services. The contract sets the price at 4,000 per month, which is the normal stand-alone price that Yankee charges. After 16 months, Yankee and Albany agree to modify the contract. Yankee reduces the fee for the 8 remaining months to 3,800 per month, and Albany agrees to a 24-month extension at a cost of 3,600 per month. At the time that the contract is modified, Yankee is charging other customers 3,750 per month for the coaching service. Should Yankee and Albany treat the modification as a separate contract?
Kikiam Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P4,000. Kikiam Company’s past experience shows that of the total pesos spent for repairs in service contracts, 40% in incurred evenly during the first contract year and 60% evenly during the second contract year. Kikiam Company sold 1,500 contracts evenly throughout 2020 and 900 contracts evenly throughout 2021. How much should Kikiam Company report as contract service revenue for the year ended December 31, 2021?
Cobra Company sells appliance service contracts agreeing to repair appliances for a three-year period. The past experience is that the total amount spent for repairs on service contracts, 40% is incurred evenly during the first contract year, 25% is incurred evenly during the second contract year and 35% is incurred evenly during the 3rd contract year. Receipts from service contract sales are P500,000 for 2020 and P600,000 for 2021. How much is the balance of unearned revenue pertaining to 2020 sales as of December 2021?
.LIA Co. sells service contracts that cover a 2-year period. The sale price of each contract is P2,000. LIA sold 1,000 contracts evenly throughout 20x1. LJ’s past experience shows that of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. Requirements: How much are the current and noncurrent portions of the deferred revenue to be presented in LJ’s December 31, 20x1 statement of financial position? How much is the service revenue recognized in 20x2?
ABC Company sells equipment service contracts that cover a two-year period. The sales price of each contract is P 600. ABC'S past experience is that, of the total pesos spent for repairs on service contracts, 40% is incurred evenly during the first contract year and 60% evenly during the second contract year. ABC sold 1,000 contracts evenly throughout 20x8. In its December 31, 20x8 balance sheet, what amount should ABC report as deferred service contract revenue? __________ In its December 31, 20x9 income statement, what amount should ABC report as service contract revenue? ___________
In 20x1, Metallica Co. enters into a construction contract with a customer. The transaction price in the contract is ₱1,200,000. At contract inception, Metallica Co. estimates a total contract cost of ₱944,000. The actual costs incurred in 20x1 are ₱590,000. The estimated cost to complete on December 31, 20x1 is ₱410,000. Progress billings during the year amount to ₱70,000, ₱60,000 of which is collected. At contract inception, Metallica Co. determines that its performance obligation in the contract is a single performance obligation that is satisfied over time. Metallica Co. uses the cost-to-cost method to measure its progress in the contract. How much is the profit recognized in 20x1? a. 118,000 c. 122,000 b. 120,800 d. 132,200
Fajardo Company sells appliance service contracts agreeing to repair appliance for 2-year period. Fajardo Company’s past experience is that, of the total amount for repairs on service contracts, 40% is incurred evenly during the 1st contract year and 60% evenly during the second contract year. Receipts from service contracts for the 2 years ended December 31, 2021, are as follows: 2020, P500,000; 2021, P600,000. Receipts from contracts are credited to unearned service contract revenue. Assume that all contract sales are made evenly during the year. Group of answer choices 630,000 480,000 360,000 470,000
NAPAPALUNOK AKO AS OF THE MOMENT INC. sells 3-year service contracts for air conditioning units for P1,500 each. Sales of service contracts are made evenly throughout each year. The company estimates that 15% of repairs are done in the first year from the date of sale, 35% in the second year, and 50% in the third year. Service contracts sold are as follows. How much is the unearned revenue from service contracts as of December 31, 2019? a. P 1,417,500 b. P 2,525,250 c. P 3,370,500 d. P 3,942,750

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