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How much should ABC Company recognized as revenue in the first year of the contract on December 31, 20x1?
How much should ABC Company recognized as revenue in the first year of the contract if DEF has the right to use the license on December 31, 20x1?
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- 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.Rix Company sells home appliances and provides installation and service for its customers. On April 1, 2019, a customer purchased a dishwasher that Rix normally sells for 1,000. In addition, the customer purchased the installation service and a 3-year service contract, with stand-alone selling prices of 200 and 400, respectively. Because the customer purchased all three items as a bundle, Rix charged the customer 1,400. Required: 1. How should the transaction price be allocated among the products? 2. Prepare the journal entries to recognize revenue related to each product in 2019.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.
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- 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 January 2, 2021, A Company signed an agreement to operate as a franchisee of B for an initial franchise fee of P2,250,000 for 10 years. Of this amount, P420,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2021. The company issued a promissory note for the balance, the relevant interest rate being 24%. Assume that substantial services amounting to P333,960 had already been rendered by B and that additional indirect franchise cost of P56,400 was also incurred. The franchisee started operations during 2021 with a total sales of P360,000. The agreement further provides that the franchisee must pay a continuing franchise fee equal to 3% of its gross sales. If needed, the PV factor is 2.40. Assuming the note is non-interest-bearing and its collection is reasonably assured, calculate the net income reported by B on the franchise for the year ended December 31, 2021. Assuming the note is interest-bearing and its…