Crane Biotech enters into a licensing agreement with Windsor Pharmaceutical for a drug under development. Crane will receive apayment of $8,600,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Cranedetermines it is 85% likely that the drug will gain approval and a 15% chance of denial.(a)Determine the transaction price of the arrangement for Crane Biotech.Transaction price$eTextbook and MediaList of AccountsSave for LaterAttempts: 0 of 3 used Submit Answer(b)The parts of this question must be completed in order. This part will be available when you complete the part above.

Step 1: Understand the payment and probabilities.Crane Biotech will receive a payment of $8,600,000…

Answered: Crane Biotech enters into a licensing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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(Determine Transaction Price) Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial.Instructions(a) Determine the transaction price of the arrangement for Blair Biotech.(b) Assuming that regulatory approval was granted on December 20, 2017, and that Blair received the payment from Pang on January 15, 2018, prepare the journal entries for Blair. The license meets the criteria for point-in-time revenue recognition.
Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial. Instructions a. Determine the transaction price of the arrangement for Blair Biotech. b. Assuming that regulatory approval was granted on December 20, 2020, and that Blair received the payment from Pang on January 15, 2021, prepare the journal entries for Blair. The license meets the criteria for point-in-time revenue recognition.
None
Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85%…
On May 1, 2020, Mount Company enters into a contract to transfer a product to Eric Company on September 30, 2020. It is agreed that Eric will pay the full price of $25,000 in advance on June 15, 2020. Eric pays on June 15, 2020, and Mount delivers the product on September 30, 2020. Prepare the journal entries required for Mount in 2020.
In package of the products, an entity included coupons that may be presented at retail stores to obtain discounts. Retailers were reimbursed for the face amount of coupons redeemed plus 10% of that amount for handling costs. The entity honored requests for coupon redemption by retailers up to three months after the consumer expiration date. The entity estimated that 70% of all coupons issued would ultimately be redeemed. The consumer expiration date is December 31, 2019. The total face amount of coupons issued was P6,000,000 and the total payments to retailers during 2019 amounted to P2,200,000. What amount should be reported as liability for unredeemed coupons on December 31, 2019? 2,420,000 2,000,000 0 4,440,00
UniTel Co provides a bundled-service package to B. Mann for $4,200 upfront. The service package includes upfront advice, 'on-call' advice, and database access for a 1-year period. If each service was sold separately to B. Mann the fees would be: Up-front advice: $900 On-call advice: $1,800 Database access: $2,700 Using the relative fair value approach, what is the amount of revenue recognised in relation to the on-call advice is (rounded to the nearest whole dollar): O $700 O $1,400 $1,800 $2,100
On Jan. 1, 2020, ABC Corporation entered into a franchise agreement with a P570,000 cash payment as initial franchise fee. The fee covers the initial services with the following stand- alone prices. Location identification Market Study P 150,000 Manager Training APIZ Employee Training P 50,000 200,000 ABC charges a mark-up on cost of 25% when it computes the stand-alone prices of all its services. On Jan 31, 2020, ABC 200,000 a has completed the location identification and market study. How much is the gross profit from the franchise to be reported warning with mandatory dotyvolalain tensprejto in the income statement for January 2020?spension to dismissal/ non-readmission with
3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.
On January 1, 2023, Crane Company enters into a contract to transfer Product A and Product B to Shamrock Co. for $132,000. The contract specifies that payment for Product A will not occur until Product B is also delivered. In other words, payment will not occur until both Product A and Product B are transferred to Shamrock. Crane determines that stand-alone prices are $31,200 for Product A and $100,800 for Product B. Crane delivers Product A to Shamrock on February 1, 2023. On March 1, 2023, Crane delivers Product B to Shamrock. What journal entries should Crane make in regard to this contract in 2023? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. List all debit entries before credit entries. Record journal entries in the order presented in the problem.) Date Account Titles Debit Credit
Current Attempt in Progress On May 10, 2020, Sunland Co. enters into a contract to deliver a product to Splish Brothers Inc. on June 15, 2020. Splish Brothers agrees to pay the full price of $2,210 on July 15, 2020. The cost of goods is $1,190. Sunland delivers the product to Splish Brothers on June 15, 2020, and receives payment on July 15, 2020. Prepare the journal entries for Sunland on May 10, June 15, and July 15 related to this contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Record journal entries in the order presented in the problem.) Date Account Titles and Explanation Debit Credit (To record the delivery) (To record cost of goods sold)
VICWT Uncies Current Attempt in Progress On May 1, 2025, Jackson Inc. entered into a contract to deliver one of its specialty mowers to Wildhorse Landscaping Co. The contract requires Wildhorse to pay the contract price of $895 in advance on May 15, 2025. Wildhorse pays Jackson on May 15, 2025, and Jackson delivers the mower (with cost of $557) on May 31, 2025. Prepare the journal entry on May 1, 2025, for Jackson. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Date May 1, 2025 Account Titles and Explanation eTextbook and Media List of Accounts Debit Credit

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