Required:1. Assume F&S offers a deal whereby enrolling in a new membership for $1,900 provides a year of unlimited access to facilities andalso entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered togym members as well as to the general public. A new membership normally sells for $1,940, and a one-year enrollment in yogaclasses sells for an additional $600. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10%discount on all one-year enrollments in classes as part of its normal promotion strategy.a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation youhave indicated, allocate a portion of the contract price.c. Prepare the journal entry to recognize revenue for the sale of a new membership.2. Assume F&S offers a "Fit 60" coupon book with 60 prepaid visits over the next year. F&S has learned that Fit 60 purchasersmake an average of 50 visits before the coupon book expires. A customer purchases a Fit 60 book by paying $600 in advance,and for any additional visits over 60 during the year after the book is purchased, the customer can pay a $10 visitation fee pervisit. F&S typically charges $10 to nonmembers who use the facilities for a single day.a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation youhave indicated, allocate a portion of the contract price.c. Prepare the journal entry to recognize revenue for the sale of a new Fit 60 book.Complete this question by entering your answers in the tabs below.Req 1A and 1BReq 1CReq 2A and 2B Req 2CIndicate below whether each item is a separate performance obligation. For each separate performance obligation you haveindicated, allocate a portion of the contract price.Item DescriptionYoga discount voucherFacilities accessTotal stand alone pricePerformanceObligation?Stand Alone PricesPercentage of TotalStand Alone PricesItem DescriptionPercentage ofTotal StandTotal TransactionPriceAllocated ContractPriceAlone PriceYoga discount voucherFacilities access

Revenue Recognition means the recording of revenues of an entity in its books. It is an accrual…

1. Assume F&S offers a deal whereby enrolling in a new membership for $1,900 provides a year of unlimited access to facilities and also entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $1,940, and a one-year enrollment in yoga classes sells for an additional $600. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10% discount on all one-year enrollments in classes as part of its normal promotion strategy. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.

1. Assume F&S offers a deal whereby enrolling in a new membership for $1,900 provides a year of unlimited access to facilities and also entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered to gym members as well as to the general public. A new membership normally sells for $1,940, and a one-year enrollment in yoga classes sells for an additional $600. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10% discount on all one-year enrollments in classes as part of its normal promotion strategy. a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have indicated, allocate a portion of the contract price.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: (a) On June 1, 2021, Helen Martin purchases lakefront property from her neighbor, Josh Hutcherson,…

A: Present value (PV) is a financial concept used to determine the current worth of a future sum of…

Q: Congratulations - you have secured your first job after graduating from Isenberg. Your employer is…

A: The objective of the question is to find the unknown annuity amount for the second option that would…

Q: Davenport Inc. offers a new employee a single-sum signing bonus at the date of employment.…

A: The amount paid in 3 years later is = $67000The present value of this amount…

Q: Adams's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn…

A: Warranty expense is an accounting estimate of the cost a company expects to incur to fulfill its…

Q: On January 1, 2025, Debra Smith signed an agreement, covering 5 years, to operate as a franchisee of…

A: Answer:- A method of selling products and services that is based on a relationship between the local…

Q: On January 1, 2025, Barbara Brown signed an agreement, covering 5 years, to operate as a franchisee…

A: Here's a review to ensure the accuracy of the journal entries based on the given problem. Here's a…

Q: K Interest-only loan (regular interest payments each year and principal at maturity). Chuck Ponzi…

A: The Interest only loan refers to the loan arrangement where the interest on the borrowed amount is…

Q: On January 1, 2025, Maria Wilson signed an agreement, covering 5 years, to operate as a franchisee…

A: Franchising:It is a strategy for selling goods and services that relies on a partnership between the…

Q: Question 1 Facebook Inc. bought WhatsApp Inc. for a total of S19 billion in cash and shares in…

A: "Since you have posted multiple questions, we will solve the first question for you. To get the…

Q: Ayayai Corporation bought a new machine and agreed to pay for it in equal annual installments of…

A: Given, Installment (P) = $5,570 Number of periods (n) = 10 Interest rate (r) = 0.08

Q: On January 1, 2024, Bloomfield Enterprises purchases a building for $327,000, paying $57,000 down…

A: Journal Entries are used to record transactions in the books of accounts of the company.

Q: Fit & Slim (F&S) is a health club that offers members various gym services. Required: 1. Assume F&S…

A: New membership @ $1300 with Yoga Class Vouchers @ 25% New membership sells @ $1470 with additional…

Q: Need your help please in part B. Thank you

A: Present value is the current value of a future amount that is to be received or paid out. Future…

Q: Davenport Inc. offers a new employee two options. First, the employee can receive a one-time signing…

A: Present value is the current value of a future sum of money discounted at the time value of money.

Q: On January 1, 2025, Laura Allen signed an agreement, covering 5 years, to operate as a franchisee of…

A: A method of selling products and services that is based on a relationship between the local operator…

Q: Assume F&S offers a deal whereby enrolling in a new membership for $700 provides a year of unlimited…

A: Revenue Recognition : It is an accounting principle that says that revenue must be recognized as it…

Q: Company XYZ has hired you as a consultant. It has suggested two options to pay for your services:…

A: Payment plan A payment plan can be the process of consolidating multiple debts into one manageable…

Q: On January 1, 2024, Rick's Pawn Shop leased a truck from Corey Motors for a six-year period with an…

A: lease - It is contract between lessor and lessee wherein an asset is given to lessee in…

Q: Sheridan Crossburgers Inc. charges an initial franchise fee of $75,000. Upon the signing of the…

A: A journal entry is a record of a financial transaction in a company's accounting journal. It's the…

Q: Stores is offering employe severance package of $104,000 cash paid today; $104,000 to be paid in one…

A: Many areas of accounting or finance, such as investment analysis, personal finance, and corporate…

Q: At the beginning of the year. Happy Haus got the franchise of Hogan House, a known steak house of…

A: For Calculating the Earned Franchise Fees which are included with the details of the down payment…

Q: On January 1, 2025, Barbara Brown signed an agreement, covering 5 years, to operate as a franchisee…

A: Step 1:a.Before proceeding with the journal entries in the books of franchisor, we need to calculate…

Q: Creative Computing sells a laptop computer called the Creative Package to Professor Smith with an…

A: The performance obligation is the promise made by the parties when they are entered into the…

Question

Required:
1. Assume F&S offers a deal whereby enrolling in a new membership for $1,900 provides a year of unlimited access to facilities and
also entitles the member to receive a voucher redeemable for 30% off yoga classes for one year. The yoga classes are offered to
gym members as well as to the general public. A new membership normally sells for $1,940, and a one-year enrollment in yoga
classes sells for an additional $600. F&S estimates that approximately 50% of the vouchers will be redeemed. F&S offers a 10%
discount on all one-year enrollments in classes as part of its normal promotion strategy.
a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you
have indicated, allocate a portion of the contract price.
c. Prepare the journal entry to recognize revenue for the sale of a new membership.
2. Assume F&S offers a "Fit 60" coupon book with 60 prepaid visits over the next year. F&S has learned that Fit 60 purchasers
make an average of 50 visits before the coupon book expires. A customer purchases a Fit 60 book by paying $600 in advance,
and for any additional visits over 60 during the year after the book is purchased, the customer can pay a $10 visitation fee per
visit. F&S typically charges $10 to nonmembers who use the facilities for a single day.
a. & b. Indicate below whether each item is a separate performance obligation. For each separate performance obligation you
have indicated, allocate a portion of the contract price.
c. Prepare the journal entry to recognize revenue for the sale of a new Fit 60 book.
Complete this question by entering your answers in the tabs below.
Req 1A and 1B
Req 1C
Req 2A and 2B Req 2C
Indicate below whether each item is a separate performance obligation. For each separate performance obligation you have
indicated, allocate a portion of the contract price.
Item Description
Yoga discount voucher
Facilities access
Total stand alone price
Performance
Obligation?
Stand Alone Prices
Percentage of Total
Stand Alone Prices
Item Description
Percentage of
Total Stand
Total Transaction
Price
Allocated Contract
Price
Alone Price
Yoga discount voucher
Facilities access

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Define 'Revenue Recognition':

VIEW

Step 2: (1a & 1b) Indication of performance obligation and allocate a portion of the contract price:

VIEW

Step 3: (1c) Prepare the journal entry to recognize revenue for the sale of a new membership:

VIEW

Step 4: (2a & 2b) Indication of performance obligation and allocate a portion of the contract price:

VIEW

Step 5: (2c) Prepare the journal entry to recognize revenue for the sale of a new Fit 60 book:

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps with 6 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

PLEASE, PERFORM THE EXERCISE IN EXCEL AND SHOW THE FORMULASProblem 2:René Lara has just signed in notary #8, the contract for the purchase and sale of a house, for a value of 1'470,000.00. He showed the seller the equivalent of a 20% down payment, and the notary the deed expenses, valued at $25,000.00 and will pay the rest in equal monthly payments during the next 15 years, which include interest at 9½% nominal interest. a) Find the value of each of the monthly payments.b) Find the total amount paid.c) Find the total amount of interest paid.d) Find the effective rate. Note:In the image, this is the original exercise, it is in Spanish, but it is easy to understand. Very important Note:It is necessary that you make a solution approach and then the result. Above all, to check the procedure and/or the formulas used, especially when you use excel.
Garland Inc. offers a new employee a single-sum signing bonus at the date of employment, June 1, 2021. Alternatively, the employee can receive $39,000 at the date of employment plus $10,000 each June 1 for five years, beginning in 2025. Assuming the employee's time value of money is 9% annually, what single amount of the employment date would make the options equally desirable? (EV. of $1. PV of $1. EVA of $1. PVA of $1 EVAD of 51 and PVAD of 5) (Use appropriate factor(s) from the tables provided.) Pr
Show the solution in good accounting form Diamond's Pizza Inc. enters into a franchise agreement on December 31, 2019, giving Domino Corp. the right to operate as a franchisee of Diamond's Pizza for 5 years. Diamond charges Domino an initial franchisee fee of P475,000 for the right to operate as a franchisee. Of this amount, P190,000 is payable when Domino Corp. signs the agreement, and the balance is payable in five annual payments of P57,000 each on December 31. Consider the following for allocation of the transaction price at December 2019. Rights to the trade name, market area, technical and propriety know-how P190,000.00 Services - training, etc 94,591.50 Machinery and equipment etc. (costing, P95, 000) 133,000.00 Total Transaction price P417,591.50 The credit rating of Domino indicates that money can be borrowed at 8%. The present value of an ordinary annuity of five annual receipts of P57,000 each discounted at 8% is P227, 591.50. The discount of P57,408.50 represents…
You have been offered a contract from Comp Co. You will receive $120,000 up front from Comp Co. In exchange, you will provide $50,000 in services each year for 3 years. Your cost of capital is 10%. Find the NPV and IRR of the deal. Should you accept the contract? Explain.
Creative Computing sells a laptop computer called the Creative Package to Professor Smith with an extended warranty for $780. The $780 price of a Creative Package includes the following: One laptop Computer A one year basic assurance warranty. This warranty guarantees that Creative will cover any costs that arise due to repairs or replacements associated with defective products for up to one year. An agreement that Professor Smith will pay an additional $75 to purchase an extended 1 year warranty. How many performance obligations are included in this sale of the Creative Package? Question 13 options: a) 1 b) 2 c) 3 d) 4
Revenue Recognition Policy Decisions. For each of these situations, describe the revenue recognition policy that you believe that the company should follow. An international health club sells lifetime memberships costing $1,500 which allow the purchaser unlim-ited use of any of the club’s 300 facilities around the world. The initiation fee may be paid in 36 monthly installments, with a two percent interest charge on any unpaid balance. Franklin Motors, Inc., has always offered a limited, 36-month warranty on its cars and trucks, but to counter the significant competition in the industry, the company has come to the conclusion that it must do something more. With that in mind, the company developed a new warranty program: For a $1,500 payment at the time of purchase, a customer can buy a seven-year warranty that will cover replacement of almost all parts and labor. The purchased warranty expires at the end of seven years or when the customer sells the vehicle, whichever occurs first.…
Current Attempt in Progress Tony's Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2025, Tony sold $282,900 of new specialty mowers for golf greens for which Tony's service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2025. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2025. The controller for Tony's Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2025. Year 2026 2027 2028 Cash Flow Estimate $2,440 3,930 5,460 $2,900 5,440 5,560 $3,980 5,860 6,510 Probability Assessment 20% 60% 20% 30% 50% 20% 30% 40% 30% Click here to view factor tables. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2025 sales. Use an annual discount…