On January 1, 20x1 , ABC Co. enters into a contract with a customer to transfer a license for a fixed fee of P100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented by a note receivable collectible in 4 equal annual installments starting December 31,20x1. The appropriate discount rate is 12%. The license transfers to the customers on January 1, 20x1. ABC Co. incurs direct contract costs of P20,000 on January 1, 20x1. On January 1, 20x1, ABC Co. determines that there is significant uncertainty as to the collectability of the note. The license provides the customer with the right to use ABC's intellectual property as it exists at the point in time at which the license is granted. a. The credit to contract liability on December 31, 20x1, is b. The credit to unearned interest income on December 31, 20x1 is c. The franchise revenue to be recorded in 20x1
On January 1, 20x1 , ABC Co. enters into a contract with a customer to transfer a license for a fixed fee of P100,000 payable as follows: 20% is payable upon signing of contract. 80% is represented by a note receivable collectible in 4 equal annual installments starting December 31,20x1. The appropriate discount rate is 12%. The license transfers to the customers on January 1, 20x1. ABC Co. incurs direct contract costs of P20,000 on January 1, 20x1. On January 1, 20x1, ABC Co. determines that there is significant uncertainty as to the collectability of the note. The license provides the customer with the right to use ABC's intellectual property as it exists at the point in time at which the license is granted. a. The credit to contract liability on December 31, 20x1, is b. The credit to unearned interest income on December 31, 20x1 is c. The franchise revenue to be recorded in 20x1
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 20x1 , ABC Co. enters into a contract with a customer to transfer a license for a fixed fee of P100,000 payable as follows:
20% is payable upon signing of contract.
80% is represented by a note receivable collectible in 4 equal annual installments starting December 31,20x1. The appropriate discount rate is 12%.
The license transfers to the customers on January 1, 20x1.
ABC Co. incurs direct contract costs of P20,000 on January 1, 20x1.
On January 1, 20x1, ABC Co. determines that there is significant uncertainty as to the collectability of the note.
The license provides the customer with the right to use ABC's intellectual property as it exists at the point in time at which the license is granted.
a. The credit to contract liability on December 31, 20x1, is
b. The credit to unearned interest income on December 31, 20x1 is
c. The franchise revenue to be recorded in 20x1
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