mber 31, 20x1. contract revenue will Krabs recognize in 20x1? c. 80,747 d. 0 a. 60,747 b. 79,132 TI
mber 31, 20x1. contract revenue will Krabs recognize in 20x1? c. 80,747 d. 0 a. 60,747 b. 79,132 TI
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
1.
please provide solution in good accounting form. thank you!
![Use the following information for the next four questions:
On December 31, 20x1, Mr. Eugene H. Krabs Co. enters into a
contract with Sheldon J. Plankton Co. to transfer a license for a
fixed fee of P100,000 payable as follows:
20% upon signing of contract.
80% in 4 equal annual installments starting December 31, 20x2.
The appropriate discount rate is 12%.
●
4. The license provides Plankton rights over Mr. Krabs' patented
secret formula for a burger patty. Plankton continues to
operate using its trade name and has the discretion of
developing a new product name for the products it will
produce using the secret formula. The license does not
explicitly require Mr. Krabs to undertake activities that will
significantly affect the intellectual property to which Plankton
has rights. Neither does Plankton expect that Mr. Krabs will
undertake such activities. Mr. Krabs provides the secret
formula to Plankton on December 31, 20x1. How much
contract revenue will Krabs recognize in 20x1?
c. 80,747
d. 0
5
a. 60,747
b. 79,132
TI](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3255b1a2-8cc0-4cd5-a14d-90a205f3ab6f%2F15deb909-e227-4dfe-b38c-a8d69c9698cb%2Ftxcq3ej_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Use the following information for the next four questions:
On December 31, 20x1, Mr. Eugene H. Krabs Co. enters into a
contract with Sheldon J. Plankton Co. to transfer a license for a
fixed fee of P100,000 payable as follows:
20% upon signing of contract.
80% in 4 equal annual installments starting December 31, 20x2.
The appropriate discount rate is 12%.
●
4. The license provides Plankton rights over Mr. Krabs' patented
secret formula for a burger patty. Plankton continues to
operate using its trade name and has the discretion of
developing a new product name for the products it will
produce using the secret formula. The license does not
explicitly require Mr. Krabs to undertake activities that will
significantly affect the intellectual property to which Plankton
has rights. Neither does Plankton expect that Mr. Krabs will
undertake such activities. Mr. Krabs provides the secret
formula to Plankton on December 31, 20x1. How much
contract revenue will Krabs recognize in 20x1?
c. 80,747
d. 0
5
a. 60,747
b. 79,132
TI
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