Problem 5: ABC IS Collected an upfront fee of P200,000 from a customer. As of this date, the contract qualifies for PFRS 15. Due to unforeseen circumstances, the parties later agreed to have P150,000 be refund and the contract be cancelled. SAPIENTIA EDIFICAL Required: 12. If 30% of the performance obligation have been provided, how much is gain/(loss) on contract cancellation?

Problem 5: ABC IS Collected an upfront fee of P200,000 from a customer. As of this date, the contract qualifies for PFRS 15. Due to unforeseen circumstances, the parties later agreed to have P150,000 be refund and the contract be cancelled. SAPIENTIA EDIFICAL Required: 12. If 30% of the performance obligation have been provided, how much is gain/(loss) on contract cancellation?

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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Question: A firm enters into a 15-year contract for materials that cost $100,000 initially and $25,000/yr starting at the end of year (5). The company decides to make a lump sum payment at the end of year 3 to pay off the remainder of the contract. What lump sum is necessary at 10% interest?
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On the 31 December 2015, Nhyiraba Limited leased a machine for a project from Manii Limited up until 31 December 2020. There was no known interest rate in the contract agreement but Nhyiraba Limited’s current cost of borrowing stood at 5 percent with a present value interest factor of an annuity (PVIFA) 2.50. The annual lease payment of R150,000 payable in advance was applied Prepare a financial statement extract (income statement and SOFP) for the above transactions
18) Hopner Products enters into a contract with Tulles to sell three different products. The total transaction price is $350,000. Each of the products is a separate performance obligation. Based on the information presented in the table, what is the allocated transaction price of product Z using the adjusted market assessment approach? (Round intermediary percentages to the nearest hundredth percent, and round your final answer to the nearest whole number.) Product X Y Z A) $104,055 B) $116,286 C) $116,667 D) $90,000 Standalone Price Market Price $130,000 $110,000 $120,000 $150,000 Not Available $110,000
You have a CPIF contract with a target cost of $3,125,000 and a target fee of $156,250. The associated clause states… “(e) Fee payable (1) The fee payable under this contract shall be the target fee increased by 15 cents for every dollar that the total allowable cost is less than the target cost or decreased by 20 cents for every dollar that the total allowable cost exceeds the target cost. In no event shall the fee be greater than 7 percent or less than 2 percent of the target cost.” Given a final cost of $2,750,000 determine the final fee and the final contract funding.. Single choice.
Q.3.2 On 1 January 2022 (the contract date), Furniture Ltd sold R1 200 000 worth of furniture to a new housing development in Centurion. Furniture Ltd immediately credited their sales revenue with the R1 200 000. Included in the sales contract, was a complementary servicing arrangement in which Furniture Ltd would provide the customer with annual servicing of the furniture (in case of any breakages or manufacturing faults) for a period of three years from the date of the contract. The normal selling price of the furniture without any annual servicing is R1 400 000. The normal price charged to customers for annual servicing is R14 000. REQUIRED: Calculate the amount of revenue that Furniture Ltd should recognise, for the financial year end of 30 June 2022, with respect to the transaction above. Ignore the time value of money and VAT. |||
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A security contract entered into for a period of 3 years was revoked because of an impled flaw in the contract. The court ruled that the total contract price had to be paid The contract price received by the recipient should be treated as A I 1 Capital because it was received in a lump sum 8 11 Assessable income because it was an amount received to replace loss of earnings CI 1 A windtall gain becauso the company was not expecting the payment D I 1 An exempt income because no services were provided
The following two independent situations involve loss contingencies. Part 1: Benson Company sells two products, Grey and Yellow. Each carries a 1-year warranty. 1. Product Grey—Product warranty costs, based on past experience, will normally be 1% of sales. 2. Product Yellow—Product warranty costs cannot be reasonably estimated because this is a new product line. However, the chief engineer believes that product warranty costs are likely to be incurred. Instructions How should Benson report the estimated product warranty costs for each of the two types of merchandise above? Discuss the rationale for your answer. Do not discuss disclosures that should be made in Benson’s financial statements or notes. Part 2: Constantine Company is being sued for $4,000,000 for an injury caused to a child as a result of alleged negligence while the child was visiting the Constantine Company plant in March 2020. The suit was filed in July 2020. Constantine’s lawyer states that it is probable that…
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There were many criticisms of MFRS 117 Accounting for Leases which lead to the new MFRS 16 Accounting for Leases. Lessee Alpha Bhd enters into a contract to lease a warehouse on 1 Jan 2019 for 3 years. The annual rental payments are RM3,200,000, including the cleaning services, all payable at the end of the year. The rental for similar warehouse without cleaning services is RM2,800,000 per annum and the cost of cleaning services was RM600,000 per annum. Implicit interest rate is 7%. The estimated useful life of the warehouse is 20 years. Financial year end is 31 December. Required: Illustrate with explanations the accounting treatment for this contract under MFRS 117 and MFRS 16 .