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Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:ABC Co. sells gift certificates that expire one year after
issuance. Information on gift certificates is shown below:
Gift card liability, January 1, 20x1 120,000
Gift certificates sold during 20x1 1,000,000
Prior year gift certificates redeemed in 20x1
112,000
Gift certificates sold and redeemed in 20x1
760,000
ABC Co. past experience indicates that 5% of gift certificates
sold are never redeemed. Under PFRS 15, what amounts of
(1) total revenue and (2) liability should be reported in ABC
Co's 20x1 financial statements?
А
930,000; 208,000
В
760,000; 198,000
872,000; 190,000
D
920,000; 200,000
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