In the year 20X1, a lawsuit erupts between TK and its supplier KT. The legal dispute is expected to result in legal costs of EUR 15,000. The process will continue and be decided in the year 20X2. In February 20X2 comes an invoice for the legal costs of EUR 12,000. TK will settle the bill in April. Which of the following posting records result/result in the years 20X1 or 20X2 from the business transactions mentioned?
Q: One of Rose’s suppliers, Powder Bhd, had adverse publicity due to the issue of cleanliness of its…
A: A contingent asset is an asset that depends upon the future events of the Company. These are the…
Q: How much total revenue is recognized from the contract in 20x1?
A:
Q: d, if the contractor was able to finish the building earlier than agreed, it will be rewarded an…
A: In the given situation, a construction contract was agreed upon at certain price with an cost…
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A: As per IAS 15 Revenue recognition When distinct goods or services are provided at standalone…
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A: Sale on Approval is a business arrangement wherein an individual or company who is interested in…
Q: July 2020, Sykick Software Company licenses its accounting software to RayHawk Corporation at a cost…
A: Journal entries are passed following the golden rules of accounting. Debit all assets and expenses…
Q: On October 1, 2021, Sputnik V Company leased from Gamaleya Company a set of furniture, which Sputnik…
A: Formula: Monthly rent = Total Rent / number of months
Q: Careful Company sells goods that cost P600,000 to a customer for P800,000 on December 20, 2021. The…
A: Revenue will be recognise as and when performance obligation satisfied. It can be recognise at the…
Q: Epsilon is an entity which prepares financial statements, in accordance with International Financial…
A: Purchase of machine: The cost of purchasing the machine from the foreign supplier (20 million…
Q: Brisk, Whisk and Frisk agree to sell construction tools for a period of one month. Brisk agrees to…
A: Sales…
Q: August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300…
A: As per IAS 15 Revenue recognition the contract modification will be treated as part of existing…
Q: Daniel Martin and John Duke contracted with J & S Distributors, Inc., to purchase a KIS Magnum…
A: Requirement a: In the current situation, JS failed to complete the order within the mentioned time…
Q: On October 2, 2020, Ivanhoe Company sold $5,630 of its elite camping gear (with a cost of $3,320) to…
A: Sales Agreement: An contract of sale specifies the terms and conditions under which the seller will…
Q: Mean Dones and Jeremie Jane Roldan Inc. charges an initial franchise fee of P920,00, with P200,000…
A: This question deals with how much revenue should be recorded as the revenue from franchise fee.…
Q: On January 1, 2018, Star Construction Company entered into a contract with KC Company to build a…
A: As per our protocol we are supposed to answer one full question. Kindly repost the question to get…
Q: On July 1, 2021, Discipline Company obtained a contract to construct a building which is estimated…
A: Solution: Contract price when contract was entered into on July 1 2021 = Total billings to client +…
Q: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
Q: On October 31, Year 1, Trailer Homes Company (THC) determines that it will need to buy 175,000 lbs…
A: With the strike price (X) and the market spot price (S) at forward date when trading take place. Net…
Q: On 11/01/20X1, TK purchases a new truck at a price of EUR 205,000 plus VAT on Ziel. The transfer of…
A: All costs required to bring an asset to its present location and condition for its intended use…
Q: Sugar has entered into a long-term contract to build an asset for a customer, Hewer. Sugar will…
A: Long term contract indicates the contract related to the completion of the given task for the client…
Q: On January 1, 2020, an entity sold a new car at a price of P1,000,000 with production cost of…
A: Under Installment method to account its credit sales , the profit transaction of sales is recorded…
Q: Eastern Manufacturing is involved with several situations that possibly involve contingencies. Each…
A: a. Here, in the given situation, judgment is provided against the Company B as on February 3, 2022.…
Q: On January 1, 20x1, LOMI Ko charges an initial fee of P8,000,000 for the franchise, with P1,600,000…
A: Lets understand the basics. When franchise agreement made between the franchiser and franchisee then…
Q: Epsilon is an entity which prepares financial statements, in accordance with International Financial…
A:
Q: On 1 July 2019, Cassblanka Ltd sells a construction vehicle to Tradon Ltd. The vehicle cost…
A:
Q: On July 1, 2020, Wash Co. grants a franchisee the right to sell Wash Co.'s products in a specific…
A: As per revenue recognition principle, revenue is recognized in the books of account when the entity…
Q: On July 1, 20x1, Wash Co. grants a franchisee the right to sell Wash Co.'s products in a specific…
A: Revenue recognition can be referred to as the point at which revenue is recognized by a business…
Q: On October 1, 2021, Sputnik V Company leased from Gamaleya Company a set of furniture, which Sputnik…
A: Formula: Rent expense per month = Total rent / Number of months
Q: On July 1, 20x1, Wash Co. grants a franchisee the right to sell Wash Co.’s products in a specific…
A: Upfront Fee = [(contract value - equipment cost) / Period] x no. of months/12 =…
Q: On Jan. 1, 2020, ABC Franchisor and XYZ Franchisee signed a franchise contract over the use of ABC's…
A: Franchise contract is legal contract signed by both party franchisor and franchisee. franchisee…
Q: On 1 st January, 2020 Mr. Abid ordered a number of motor vehicles whose cash price was Tk 25,000 and…
A: Hire Purchase Account In the hire purchase account there is the agreement to repay the amount for…
Q: On July 1, 2021, S Furniture, sold to B tables and chairs for a price of P500,000 for the latter's…
A: S will not bear the loss because there is an exception to res perit domino rule
Q: On 1 July 2019, Sitara Ltd sells a computer to Kitara Ltd. The computer cost Sitara Ltd $9000.…
A: Note means an instrument acknowledging as debt due from one party to another party. It carry defined…
Q: Tokwa Inc. is involved in litigation regarding a faulty product sold in a prior year. The company…
A: Journal entries are required when the chance of loss is certain.
Q: 15. GINGERBREAD Company is involved in a litigation regarding a fau product sold in a prior year.…
A: As per IAS 37 The litigation is to be recognized as an expense to the best estimate made by an…
Q: ABC Inc, a telecommunications operator, entered into a contract with Mr. X on March 1, 20x2. In line…
A: Revenue recognition principle says that all revenues are recognised by the business when these are…
Q: In May 2019, Colt Company filed suit against Johnson Company seeking P1,900,000 damages for patent…
A: A contingent asset is a possible asset that arises from a past event and its existence will be…
Q: On 01.10.20X1, TK transfers the annual rent of EUR 7,000 for the business and office space for one…
A: when there is payment in advance it is treated as prepaid from the point of view of the one who paid…
Q: An entity sells a product to a customer for P121 that is payable 24 months after delivery. The…
A: As per the standards relating to Revenue from Contracts with customers, transaction price should be…
Q: Smart Company provided the following information as of December 31, 2019: • Smart is the plaintiff…
A: Financial statements: Financial statements are the final reports of a company, prepared at the end…
Q: Woody Limited, a furniture manufacturer, was afraid that the wood price would increase and…
A: Here discuss with the hedge account in the difference in the currency fluctuation which are incurred…
Q: In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000…
A: The sale value original goods sold before modification eill not be changed. As it was given that the…
Q: Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront…
A: The standalone selling price is the price on which a company can sell the product individually to…
Q: On 1 October 2020, Maximus sold a machine to a customer for £200,000 (excluding value added tax),…
A: Given ÷ Machine sold for £200000 Transaction price allocated =£182000 Maintenance for 4 years =…
Q: In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000…
A: SOLUTION INITIAL CONTRACT AMOUNT =30000 MODIFICATION IN CONTRACT =21600 TOTAL CONTRACT AMOUNT AFTER…
Q: In the beginning of the year 2019, EMR LLC a construction company based in ibri, has made all the…
A: a) Under accrual system of accounting, expense or revenue has to be recorded in the period it…
Q: Holt Industries received a $2,000 prepayment from the Ramirez Company for the sale of new office…
A:
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- 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.On February 1, 2023, Armen Inc. entered into a contract to deliver one of its specialty machines to Idris Inc. The contract requires Idris Inc to pay the contract price of $15,000 in advance on February 20, 2023. Idris Inc. pays Armen Inc on February 20, 2023, and Armen Inc delivers the machine (costing $12,600) on February 28, 2023 and Idris Inc starts using the machine on March 3, 2023. When should Armen Inc recognize revenue?One of Rose’s suppliers, Powder Bhd, had adverse publicity due to the issue of cleanliness of its factory. On 1 September 2019, Rose Bhd decided to terminate the contract with Powder Bhd. The contract will expire in 8 months time. According to the contract, the cost to fulfill the contract is RM160,000 per month. It is also stipulated in the contract that Powder Bhd can accept a compensation of RM1,400,000 if the contract is terminated more than 6 months before it expires. Required:For each of the events above, explain whether provisions should be recognised in accordance with MFRS 137 Provisions, Contingent Liabilities and Contingent Assets.
- On June 1, 2023, Redwood Manufacturin Co. sold equipment to Caramel Company in exchange for a zero-interest bearing note with a face value of $110,000, with paynent due in 12 months. The fair value of the equipment on the date of the sale was $100,000. The amount of revenue to be recognized on this transaction in 2023 isOn 1 st January, 2020 Mr. Abid ordered a number of motor vehicles whose cash price was Tk 25,000 and entered into a hire-purchase agreement to pay eight quarterly instalments of Tk 3,300 each. There was no down payment in the agreement. The first payment to be made on 31st March, 2020. The rate of interest is 5% per annum and the vehicles are to be depreciated at 10% per annum on the diminishing balance. Show the journal entries in the book of Mr. Abid for two year ended 31st Dec, 2020.Zoro Company enters into a contract to sell Product A and Product B on July 1, 2020 for an upfront cash payment of P250,000. Product A will be delivered at the end of the year, and Product B will be delivered the following year. Zoro Company sells Product A for P80,000 and Product B for P240,000. 1. How many performance obligations are there in the contract? 2.what is the transaction price? 3.how much is revenue to be recognized in 2020? 4. how much is revenue to be recognized in 2021?
- Smart Company provided the following information as of December 31, 2019:• Smart is the plaintiff in a lawsuit which would award damages normally set at the maximum of P1,000,000. Its legal counsel believes that is it probable that the action filed will be enforced by the court.• The entity is defending a lawsuit for patent infringement. The entity’s legal counsel believes that there is a 25% chance that the business will win the lawsuit. Damages payable ranges from P600,000 to P1,800,000.• On February 16, 2020, the local government is in the process of investigating an environmental violation committed by the entity last November. It is probable that the business will pay fees in relation to said violation and estimates the best amount at P1,000,000.• Smart is also involved in a lawsuit for a dispute with a customer. On December 31, 2019, the attorneys believe that it will remotely result to a favorable outcome. Expected damages would be 50% for P1,000,000, 20% for P3,000,000 and 30%…On October 1, 2021, Sputnik V Company leased from Gamaleya Company a set of furniture, which Sputnik will use for a period of 12 months. On this date, Sputnik paid the annual rental of P36,000 plus P3,000 incentive to Gamaleya as an inducement to grant the rental for a considerably short period of time. Sputnik reports on a calendar-year basis. How much is the rent expense reported in Sputnik V Company’s profit or loss for the year ended December 31, 2021?On June1, S offered to sell a specific generator set to B for P300,000. B sent a letter for acceptance to S on June 8. On June10, however, S became insolvent. On June 12, S received the letter of acceptance. Was the Contract perfected?
- On July 1, 2017, Dinar obtained a contract to construct a building. The building was estimated to be built at a total cost of P15,000,000 and is scheduled for completion on October 2019. The contract contains a penalty clause to the effect that the other party was to deduct P35,000 from the contract price for each week of delay. On the other hand, if the contractor was able to finish the building earlier than agreed, it will be rewarded an amount equal to P50,000 for every month of early completion. Furthermore, cost escalation clause was included in the contract. In 2018, the estimated costs of particular construction material amounting to P520,000 were bought for P780,000. The increase in the contract price related to this cost escalation was approved by the client. Completion was delayed for 4 weeks. The records show: 2017 2018 2019 Costs incurred P1,750,000 6,440,000 1,085,000 Estimated cost to complete 7,000,000 1,810,000 -- Progress billings…In July 2020, Sykick Software Company licenses its accounting software to RayHawk Corporation at a cost of $30,000 for two years and also enters into a contract to install the software for an additional $3,000. Trident sells the software license with or without installation. The accounting software is not modified or customized by the customer. Required: Prepare journal entry for Sykick to record this transaction assuming that installation will occur in July 2020 when RayHawk pays Sykick $33,000 per their agreement.Toy Company provided the following facts regarding pending litigation on December 31, 2020: • The entity is defending against a first lawsuit and believes there is a 51% chance it will lose in court. The entity estimates that damages will be P1,000,000. • The entity is defending against a second lawsuit for which management believes it is virtually certain to lose in court. •If it loses the lawsuit, management estimates damages will fall somewhere in the range of P3,000,000 to P5,000,000 with each amount in that range equally likely to occur. • The entity is defending against a third lawsuit but the relevant loss will only occur far into the future. The present values of the endpoints of the range are P1,500,000 and P2,500,000. The management believes the effects of time value of money on these amounts are material but also believes the timing of these amounts is uncertain. The entity is defending against a fourth lawsuit and believes there is only a 25% chance it will lose in court.…