On Jan. 1, 20x1, Knock Co. enters into a contract with a customer to transfer a license for a fixed fee of P100,000 payable as follows: 20% at contract inception and balance due in 4 equal annual installments starting Dec. 31, 20x1. The discount rate is 12%. At contract inception, Knock determines that there is significant uncertainty in the collectability of the note, and that the nature of the promise to grant the license is to provide the customer with the 'right to use' Knock's intellectual property as it exists at grant date. Knock transfers the license to the customer, and incurs direct contract costs of P20,000, on Jan. 1, 20x1. How much contract revenue and contract costs are recognized and expensed, respectively, in 9. 20x1? Contract revenue Contract costs a. 80,747 20,000 b. 20,187 5,000 C. 20,000 20,000 d. 0

On Jan. 1, 20x1, Knock Co. enters into a contract with a customer to transfer a license for a fixed fee of P100,000 payable as follows: 20% at contract inception and balance due in 4 equal annual installments starting Dec. 31, 20x1. The discount rate is 12%. At contract inception, Knock determines that there is significant uncertainty in the collectability of the note, and that the nature of the promise to grant the license is to provide the customer with the 'right to use' Knock's intellectual property as it exists at grant date. Knock transfers the license to the customer, and incurs direct contract costs of P20,000, on Jan. 1, 20x1. How much contract revenue and contract costs are recognized and expensed, respectively, in 9. 20x1? Contract revenue Contract costs a. 80,747 20,000 b. 20,187 5,000 C. 20,000 20,000 d. 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

what is notes recievable for On December 31;2025, Blue Inc. rendered services to Beghun Corporation at an agreed price of $106,641, accepting $41,800 down and agreeing to accept the balance in four equal installments of $20,900 receivable each December 31 . An assumed interest rate of 11% is imputed. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
On January 1, 20x1, an entity issued a noninterest-bearing note of P1,200,000 in exchange for land. The note is due in three equal annual installments every December 31. The effective interest rate is 17%. Requirements Provide all the entries during the term of the note. Compute for the current and non current portions of the note on December 31, 20x1 and the amount of “Discount on notes payable” allocated to each portion.
On December 31, 2021, Roth Company issued a P1,000,000 face value note payable to Wake Company in exchange for services rendered to Roth. The note, made at usual trade terms, is due in nine months and bears interest, payable at maturity, at the annual rate of 3%. The market interest rate is 8%. At what amount should the note payable be reported in Roth’s December 31, 2021 balance sheet?
On January 1, 2025, Coronado Co. borrowed and received $150,000 from a major customer evidenced by a zero-interest-bearing note due in 4 years. As consideration for the zero-interest-bearing feature, Coronado agrees to supply the customer's inventory needs for the loan period at lower than the market price. The appropriate rate at which to impute interest is 9%. Prepare the journal entry to record the initial transaction on January 1, 2025. Prepare the journal entry to record any adjusting entries needed at December 31, 2025. Assume that the sales of Coronado's product to this customer occur evenly over the 4-year period and that the effective-interest method is used.
On december 31, 20x1 Eugene enter into a contract with Plankton to transfer a license for a fixed dee of 100000 payable as follows: 20% upon signing of contract and 80% in 4 equal annual installments starting December 31, 20x2. The appropriate discount rate is 12%. How much contract revenue will Eugene recognize in 20x1?
On January 1, 2019, Fulton Inc. enters into a contract with Gibson to deliver goods. Gibson pays $100,000 at the time the contract is signed, at which time the goods are transferred and Fulton’s performance obligation is complete. In addition, Gibson agrees to pay Fulton $100,000 on December 31, 2019, and December 31, 2020. If Fulton entered into a financing arrangement with Gibson it would charge an interest rate of 9%. Please assist with the journal entries. Thank you! There are 8 journal entries in all.
Rahe Corp. sold a customer service contract with a price of $20,000 to Peterson Warehousing. Rahe Corp. offered terms of 2/10, n/30 and expects Peterson to pay within the discount period. Required: Prepare the journal entry to record the sale using the net method. Prepare the journal entry assuming the payment is made within 10 days (within the discount period).
Lang Warehouses borrowed $157,000 from a bank and signed a note requiring 2 annual payments of $85,034 beginning one year from the date of the agreement. (EV of $1, PV of $1. EVA of $1. PVA of $1. ÉVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: Determine the interest rate implicit in this agreement. (Do not round intermediate calculations. Round interest rate to 1 decimal place.) Solve for i Present value: Annuity payment
Max Corp. sold goods for $36,000 on July 17, 2020, and accepted a 12%, 90-day note. On August 1, the note was sold to a bank at a 15% discount rate. Required: a. Compute the proceeds. Assume a 360-day year. b. If the maker dishonored the note at maturity, prepare the entry for Max Corp. assuming $75 of bank protest fees. If an amount box does not require an entry, leave it blank.
Show solutions Hope World Company factored Php600,000 of accounts receivable to Hangsang Company on July 1, 2021. Control was surrendered by Hope World. Hangsang accepted the receivables subject to recourse for nonpayment. Hagsang assessed a fee of 2% and retains a holdback equal to 5% of the accounts receivable. the fair value of the recourse obligation is Php12,000. 17. Hope World will receive and record cash of a.Php546,000 b. Php558,000 c. Php570,000 d. Php576,000 What amount of loss on factoring should Hope World company recognize? a. None b. 12,000 c. 24,000 d. 42,000
Bruno Mars Company enters into a contract with John Legend to deliver Products X and Y in exchange for a non- interest bearing note with a face value of P192,685.38, on January 1, 2020. Product X will be delivered in December 31, 2021 and Product Y in December 31, 2024. Upon delivery of product X, Bruno Mars will receive P42,135 and the remaining P150,550.38 will be received upon delivery of Product Y. The contract is non-cancellable. Bruno normally sells Product X at P43,750 cash price equivalent while Product Y can be sold at P131,250. Nonetheless, due to the nature of the bundled purchase, John Legend is given a favorable pricing. A financing rate of 6% is appropriate based on Bruno’s credit-standing at contract inception. Bruno uses December 31 as its year end. How much total revenue can Bruno report in its December 31, 2021 income statement? How much total revenue can Bruno report in its December 31, 2024 income statement?
On January 1, 2021, Glanville Company sold goods to Otter Corporation. Otter signed an installment note requiring payment of $21,500 annually for five years. The first payment was made on January 1, 2021. The prevailing rate of interest for this type of note at date of issuance was 10%. Glanville should record sales revenue in January 2021 of: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice $107,500 $81,502 $89,652 None of these answer choices are correct.