Topic: REVENUE FROM CONTRACTS WITH CUSTOMERS Requirement: Compute for the sale revenue to be recognized from the transaction above. 7. An entity enters into a contract with a customer to sellequipment. Control of the equipment transfers to the customerwhen the contract is signed. The price stated in the contract isCU1 million plus a five per cent contractual rate of interest,payable in 60 monthly installments of P18,871.Case AIn evaluating the discount rate in the contract that contains asignificant financing component, the entity observes that the fiveper cent contractual rate of interest reflects the rate that would beused in a separate financing transaction between the entity and itscustomer at contract inception (i.e., the contractual rate of interestof fiveper cent reflects the credit characteristics of the customer).Requirement: Compute for the sale revenue to be recognized fromthe transaction above. Case BIn evaluating the discount rate in the contract that contains asignificant financing component, the entity observes that the fiveper cent contractual rate of interest is significantly lower than the12 cent interest rate that would be used in a separate financingpertransaction between the entity and itsinception (i.e., the contractual rate of interest of five per cent doesnot reflect the credit characteristics of the customer).customer at contractRequirement: Compute for the sale revenue to be recognized fromthe transaction above.

A contract is made when one party who is known as seller makes an offer and other party who is known…

Answered: Compute for the sale revenue to be…

Business

Accounting

Compute for the sale revenue to be recognized from the transaction above.

Business Its Legal Ethical & Global Environment

10th Edition

ISBN:9781305224414

Author:JENNINGS

Publisher:JENNINGS

Chapter12: Contracts And Sales:introduction And Formation

Section: Chapter Questions

Problem 9QAP

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