1. How much is the profit recognized for year 3?

2. How much is the profit for year 3?

3.

4. On December 31, 2010, Clark Inc. sold construction equipment to Build Company for P3,600,000. The equipment had a cost of P2,400,000. Build Company paid P600,000 cash on December 31, 2010 and signed a P3,000,000 interest bearing note at 10 percent payable in five annual installments of P600,000. Clark Inc. appropriately accounted for the sale under the installment method. On December 31, 2011, Build Company paid P900,000 including interest of P300,000. For the year ended December 31, 2011, what total amount of revenue (including interest) should Clark Inc. recognize from the construction equipment sale and financing?

5. Papa Inc. sells automatic voltage regulators costing P1,400 at a price of P2,400. Speaker Company buys a dozen voltage regulators on installment and trades-in six (6) of its old units at a trade-in value of P600 each. Papa Inc. spends P50 to recondition the old units and sells them for P630. Papa Inc. expects a 10 percent gross profit from the sale of used voltage regulators. How much is the over-allowance granted by Papa Inc. on the trade-in?

BOT Co, a private entity, enters into a service concession arrangement whereby BOT Co.undertakes to build an airport for the government (with completion of 2 years), operate and maintain the airport for 8 years after completion, and transfer the airport to the government at the end of Year 10. In exchange, the government pays BOT Co. 300M per year in year 3 to 10. BOT Co. makes the following estimates at contract inception: Year Construction Services 1 Contract Cost 500M 500M 20M Stand-alone selling price Forecast + 30% Forecast + 30% Forecast + 10% 2 3-10 Operation Services The imputed rate of interest in the contract is 19.10%. All cash flows take place at the end of each year. Nasagutansana Co, a private contractor, wins a bid to construct a car park for the government (with completion period of 2 years), operate and maintain the car park for the succeeding 8 years, and turnover the car park to the government at end of the 10th year. In exchange, the government grants Nasagutansana Co. the right to collect fees from car park users during the operation period. At contract inception, Nasagutansana Co. identifies a single performance obligation for the construction services and makes the following estimates: Year Contract Cost Stand-alone Selling Price Construction Services 1 600 Forecast + 30% 500 Forecast + 30% Operation Services 3-10 10 N/A 2 At the start of year 1, Nasagutansana Co. obtains a 5 year, 10% 200 bank loan to help finance the agreement. The principal on the loan matures in lump sum but interests are due annually every year-end. Assuming Nasagutansana Co collects parking fees of 200 in year 3. How much is the profit for year 3? Alien Company began operations on January 3, 2009 and appropriately used the installment sales method of revenue recognition. The following information pertains to Alien Company's operations for 2009 and 2010: 2009 P750,000 2010 P1,125,000 250,000 125,000 375,000 Sales Collections from: 2009 sales 2010 sales Accounts written off: 2009 sales 2010 sales Gross profit rates 62,500 187,500 375,000 40% 30% What amount should Alien Company report as deferred gross profit in its December 31, 2010 Statement of Financial Position for 2010 sales? BOT Co, a private entity, enters into a service concession arrangement whereby BOT Co.undertakes to build an airport for the government (with completion of 2 years), operate and maintain the airport for 8 years after completion, and transfer the airport to the government at the end of Year 10. In exchange, the government pays BOT Co. 300M per year in year 3 to 10. BOT Co. makes the following estimates at contract inception: Year Construction Services 1 Contract Cost 500M 500M 20M Stand-alone selling price Forecast + 30% Forecast + 30% Forecast + 10% 2 3-10 Operation Services The imputed rate of interest in the contract is 19.10%. All cash flows take place at the end of each year. Nasagutansana Co, a private contractor, wins a bid to construct a car park for the government (with completion period of 2 years), operate and maintain the car park for the succeeding 8 years, and turnover the car park to the government at end of the 10th year. In exchange, the government grants Nasagutansana Co. the right to collect fees from car park users during the operation period. At contract inception, Nasagutansana Co. identifies a single performance obligation for the construction services and makes the following estimates: Year Contract Cost Stand-alone Selling Price Construction Services 1 600 Forecast + 30% 500 Forecast + 30% Operation Services 3-10 10 N/A 2 At the start of year 1, Nasagutansana Co. obtains a 5 year, 10% 200 bank loan to help finance the agreement. The principal on the loan matures in lump sum but interests are due annually every year-end. Assuming Nasagutansana Co collects parking fees of 200 in year 3. How much is the profit for year 3? Alien Company began operations on January 3, 2009 and appropriately used the installment sales method of revenue recognition. The following information pertains to Alien Company's operations for 2009 and 2010: 2009 P750,000 2010 P1,125,000 250,000 125,000 375,000 Sales Collections from: 2009 sales 2010 sales Accounts written off: 2009 sales 2010 sales Gross profit rates 62,500 187,500 375,000 40% 30% What amount should Alien Company report as deferred gross profit in its December 31, 2010 Statement of Financial Position for 2010 sales