Motor Co. sells service contracts that cover a 2-year period. The sale price of each contract is P2,000. Motor Co. sold 1,000 contracts evenly throughout 20x1. Based on Motor Co.'s past experience, 40% of contracts sold are earned in the first of year the contract and 60% in the second year. Approximately, how much are the current and noncurrent portions of the deferred revenue on December 31, 20x1? a. 1,366,667; 550,000 b. 1,250,000; 630,000 c. 1,000,000; 600,000 d. 870,000; 430,000
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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 October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020..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?
- 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?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 3,942,750NAPAPALUNOK 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? Use the information given. How much is the unearned revenue from service contracts as of December 31, 2020? a. P4,657,125 b. P3,468,750 c. P2,475,000 d. P1,237,500
- 56 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. Assume that the additional term is a prospective modification to the original contract. How much revenue will be recognized on the contract for the year 2021?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? 1. Use the information given. How much revenue from service contracts is recognized in 2019? a. P204,750 b. P525,000 c. P729,750 d. P1,144,500 Use the information given. How much revenue from service contracts sold in 2019 is recognized in 2020? a. P682,500 b. P862,500 c. P955,500 d. P1,842,750ABC 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? ___________
- 62 In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonlo promises to deliver 80 more products for an additional P21,600 (P270 per station). At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery. How much revenue will be recognized on the contract for the year 2021?In August 2021, Commonlo Corp. commits to selling 100 of its merchandise to M&H Co. for P30,000 (P300 per product). The merchandise is to be delivered to M&H over the next 6 months. After 60 merchandises were delivered, the contract is modified and Commonio promises to deliver 80 more products for an additional P21,600 (P270 per station) At year-end, Commonlo delivered an additional 90 products. All sales are cash on delivery Assume that the additional term is a prospective modification to the original contract How much revenue will be recognized on the contract for the year?On January 1, 2021, SPX Company sold an inventory costing P110,000 for P150,000. A 10% down payment was made and the balance payable in 4 equal installments of P33,750, payable semi-annually starting June 30 and December 31, 2021. The market rate of interest is 12%. (Round off present value factor to three decimal places). Selling expenses related with the installment sale is P5,000. How much is the significant financing component in the contract? A.40,000B.21,943,75C.18,056,25D.16,943,75
