On December 1, 2020, ABC Co. grants customer a license to use ABC’s patented technology over a 4-year period. The contract price is P5,000,000, payable in full at contract inceptions. During Dec. 2020, ABC Co. incurs direct contract cost of P500,000 and indirect cost of P100,000. The customer obtains control of the license on January 2, 2021. Compute for the contract revenue on 2021 assuming there is right to access?

Q: On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…

A: Unearned Franchise Fees:-It is an amount for which the company has performed services but does not…

Q: During 2018, the entity billed the customer equivalent to 30% of the contract price. During 2019,…

A: Gross profit realized for 2019 is calculated in the following table: Contract price 1,000,000…

Q: A. On January 1, 2020, Machinery Corp. enters into a contraat with a oustomer for the sale of a…

A: Revenue refers to the amount which is earned by the seller or provider sells goods or provides the…

Q: On May 1, 2021, Meta Computer, Inc., enters into a contract to sell 4,100 units of Comfort Office…

A: We can find two performance obligations in this contract, they are as follows: key board customer…

Q: On December 1, 20x1, ABC Co. enters into a franchise contracts with XYZ, Inc. The franchise provides…

A: Franchise Accounting: It is as simple and the same as general accounting. A franchisee is a person…

Q: On December 31, 2021, Mr. Eusebio enters into a contract will Brandon Corp, to transfer a license…

A: On transfer of the license of a franchise a specific fee is paid, it is called franchise fees. They…

Q: On December 1, 20x1, ABC Co. enters into a franchise contracts with XYZ, Inc. The franchise provides…

A: Franchise agreement is a legal contract between the franchisor and the franchisee. Under…

Q: On May 1, 2020, Splish Company enters into a contract to transfer a product to Eric Company on…

A: The journal entries are prepared to keep the record of day to day transactions of the business.

Q: AAA Co. assigns some of its patents to other enterprises under a variety of licensing agreements. In…

A: given that, received royalties remittance of P200000   we know that,  income received in advance for…

Q: On May 1, 2020, Marin Inc. entered into a contract to deliver one of its specialty mowers to…

A: DATE  PARTICULARS DEBIT CREDIT a)       May 1, 2020 No entry is required as a contract was…

Q: Pacific Crossburgers Inc. charges an initial franchise fee of $70,000. Upon the signing of the…

A: a.

Q: Casual Company entered in a franchising contract with a franchisee on January 5, 2021. The contract…

A: Casual Company entered in a franchising contract with a franchisee on January 5, 2021. The contract…

Q: 1. On December 31, 2020, Rice, Inc. authorized Graft to operate as a franchisee for an initial…

A: “Since you have posted a many questions, we will solve first question for you. To get the remaining…

Q: On January 1, 2018, DMCI Company started the construction of a building at a fixed contract price of…

A: Gross profit is the difference between the total revenues and cost of goods sold. The financial…

Q: On January 1, 2030, ABC granted a 3 year franchise contract with XYZ. The terms of the contract are…

A: Performance obligation refers to the promise in contract to the customer in order to transfer the…

Q: Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer…

A: a) compute the gross profit to be recognized for each of the three years, assuming that the outcome…

Q: On May 10, 2020, Marigold Co. enters into a contract to deliver a product to Greig Inc. on June 15,…

A: The primary reporting of transactions in the books of accounts can be made by recording journal…

Q: On May 1, 2020, Indigo Inc. entered into a contract to deliver one of its specialty mowers to…

A: Journal entry record the financial transactions. In case money is received in advance, it is…

Q: On May 1, 2020, Mount Company enters into a contract to transfer a product to Eric Company on…

A: Date Account Titles and Explanation Debit Credit June 15, 2020 Cash $25,000…

Q: ABC’s intellectual property as it exists at grant date. Compute the contract revenue on 2021.

A: Revenue should be recognised for the patient service as given to use, as four-year payment schedule…

Q: On December 31, 2018, TurKs Company sIgned an agreement to operate as franchisee of Wendy's for a…

A: Unearned revenue is the money received by an individual in advance against which service or product…

Q: AAA Co. assigns some of its patents to other enterprises under a variety of licensing agreements. In…

A: The income or expenses in income statement should be recorded for current year only after adjusting…

Q: Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer…

A:

Q: On June 1, 2020, Chesnaught entered into a franchise agreement with Quilladin Inc. to sell their…

A: The initial franchise fee could be a fee paid to a franchisor in exchange for establishing a…

Q: On May 1, 2020, Nash Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo…

A: Date Particulars Debit Credit May 1, 2020 No entry     May 15, 2020 Cash $889      Unearned…

Q: On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment.…

A: Answer:- 1. Identify the performance obligations in the contract. a. build a new piece of…

Q: On January 1, 2020, ABC enters into a contract with a customer to transfer a license for a fixed fee…

A:

Q: On October 10, 2020, Flounder Co. entered into a contract with Belisle Inc. to transfer Flounder’s…

A: Journal Entries in the Books of Flounder Co. for the Year 2020 15th Dec. 2020        Belisle Inc.…

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 January 1, 2020, an entity granted a franchise agreement to a franchisee. The contract provides…

A: On 01.01.2020, Entity granted a franchise agreement to a franchisee Franchise agreement = Franchise…

Q: On January 1, 2018, Liquid Company accepted a long-term construction project for an initial contract…

A: Contract Revenue = % of completed during the year/ Total Contract value % of completed during the…

Q: On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment.…

A: SOLUTION-A NO PERFORMANCE OBLIGATION IS PRESENT IN THE CONTRACT . IT IS TO BE NOTED THAT THE COUNTRY…

Q: ’s intellectual property as it exists at grant date. Compute the contract revenue on 2021. (round…

A: Revenue should be recognised for the patient service as given to use, as four-year payment schedule…

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 October 5, 2020, a company enters into a contract to transfer a product to the customer. It is…

A: Revenue recognition principle says that revenues of an organisation should be recognised only when…

Q: On May 1, 2020, Teal Inc. entered into a contract to deliver one of its specialty mowers to Kickapoo…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: On January 2, 2020, Cluckin' Bells Company entered into a franchise agreement with Mr. Princeton to…

A: Initial Franchise Fees   Cash 700,000 Other 1800,000 Interest on Balance Amount of…

Q: that requires the entity to replace defective parts and Sony Company sells stereos under a 2-year…

A:

Q: Screen Co. assigns some of its patents to other enterprises under a variety of licensing agreements…

A: Financial statement: Financial information is a written record of an organization and individual…

Q: On May 10, 2020, Sweet Co. enters into a contract to deliver a product to Greig Inc. on June 15,…

A: Journal entry: Journal entry is a set of economic events which can be measured in monetary terms.…

Q: Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer…

A: 1)

Q: On January 1, 2019, Daisy company signed an agreement to operate as a franchisee for an initial…

A: Total amount of franchise = Present value of future installments + Down payment = Annual…

Q: On May 10, 2020, Cosmo Co. enters into a contract to deliver a product to Greig Inc. on June 15,…

A: Journal Entry:   It is a systematic record of a financial transaction of a company recorded in…

Q: On January 1, 2030, ABC granted a 3 year franchise contract with XYZ. The terms of the contract are…

A: Franchise Agreement In simple word the word franchise agreement which is described as legal…

Q: On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment.…

A: On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment.…

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: Bucky Corporation entered into an operating lease agreement to lease equipment from Badger, Inc. on…

A: Lease: Lease is a contractual agreement whereby the right to use an asset for a particular period of…

Q: On January 2, 2019, TI enters into a contract with Drewry Corp. to build a new piece of equipment.…

A: Journal entries are prepared to record the financial and non financial transactions of the business…

Q: On January 1, 2020, an entity granted a franchise agreement to a franchisee. The contract provides…

A: Gross profit to be recognized by the entity for the year ended December 31, 2020 in relation to the…

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.