1.

On January 2, 2020, Paul Company signed an agreement to grant a license over a patented technology to Anthony Inc., for an initial contract fee of P500,000 for 4 years. Of this amount, P100,000 was paid when the agreement was signed and the balance payable in four annual payments beginning on December 31, 2020. Paul signed a non-interest-bearing note for the balance. Paul's rating indicates that he can borrow money at 16% for the loan of this type. Assume that substantial services amounting to P150,000 had already been rendered by Paul and that additional indirect cost of P12,000 was also incurred. PV factor is 2.80. The collectability of the note is reasonably assured. On January 31, 2020, the license is transferred to Anthony. The license agreement provides that Anthony Inc. has the right to use the entity's intellectual property as it exists at the point in time at which the license is granted. How much is the total net income to be reported on December 31, 2020?

Select one:

P218,000

P230,000

P274,800

P262,800 2.

Vann enters into a contract for 2 years with Arvin to transfer a license. The agreement signed on January 2, 2020 called for a P30,000 down payment plus a 10% non-interest-bearing note of P20,000 payable in two annual payments starting December 31, 2020. The management of Arvin Co. has estimated that they can borrow a loan of this type at the rate of 10%. The license provides that Arvin has the right to use the secret formula to produce healthy juice. The license does not explicitly require Vann to undertake activities that will significantly affect the secret formula to which Arvin has rights. The collectability of the note is reasonably assured. (use 4 decimal points) What is the total revenue to be recognized on December 31, 2020?

Select one:

P47,355

P17,355

P49,090

P50,000 3.

Bean Coffee Inc. operates and franchises coffee shops around the Philippines. On January 1, 2020, Bean Coffee entered into a franchise agreement with a franchisee for a non-refundable initial franchise fee of P8,000,000 payable upon signing of contract and ongoing payment of royalties based on 5% of franchisee's sales. The contract provides that Bean Coffee shall render the following obligations to franchisee: (1) Construction of the coffee shop and delivery of coffee shop equipment's with stand-alone selling price of P5,000,000; (2) Supplies of 100,000 units of coffee raw materials and supplies with stand-alone selling price of P3,000,000; and 3) Allowing the franchisee to use the Bean Coffees trademark and tradename for a period of 10 years with stand-alone selling price of P2,000,000. Bean Coffee determines that the three obligations under the contract with franchisee are each distinct, and therefore, need to be accounted for as a separate performance obligation. As of July 1, 2020, Bean Coffee has already completed the construction of the building and has fully delivered the relevant coffee shop equipment's. However, only 40,000 units of coffee raw materials and supplies have been delivered to the franchisee and eventually consumed by the coffee shop customers as of December 31, 2020. For the year ended December 31, 2020, the franchisee reported sales revenue of P1,000,000. How much total revenue shall be reported by Bean Coffee Inc. for the year ended December 31, 2020?

Select one:

P5,170,000

P5,820,000

P4,930,000

P6,410,000 4.

On January 1, 2018, an entity granted a franchise to a franchisee. The franchise agreement required the franchisee to pay a nonrefundable upfront fee in the amount of P800,000 and on-going payment of royalty equivalent to 5% of the sales of the franchisee. The franchisee paid the nonrefundable upfront fee on January 1, 2018. In relation to the nonrefundable upfront fee, the franchise agreement required the entity to render the following performance obligations: To construct the franchisee's stall with a stand-alone selling price of P400,000. To deliver 20,000 units of raw materials to the franchisee with stand-alone selling price of P500,000. To allow the franchisee to use the entity tradename for a period of 10 years starting January 1, 2018 with stand-alone selling price of P100,000. On June 30, 2018, the entity completed the construction of the franchisee's stall. On December 31, 2018, the entity was able to deliver 6,000 units of raw materials to the franchisee. For the year ended December 31, 2018, the franchisee reported sales revenue amounting to P200,000. The entity had determined that the performance obligations are separate and distinct from one another. What is the amount of the nonrefundable upfront fee to be allocated to the construction of the franchisee's stall?

Select one:

P400,000

P500,000

P320,000

P240,000 5.

On January 1, 2030, BosCav Inc., a franchisor entered a contract with a franchisee for the establishment of a coffee shop. The franchise agreement provides that the franchisee shall pay a non-refundable upfront franchise fee in the amount of P8,000,000 payable at the date of signing of contract. The franchise agreement also provides for the payment of on-going royalties equivalent to 10% of franchisee's revenue. The franchise agreement requires BosCav to (1) to construct the coffee shop; (2) to allow the franchisee to use the BosCav's trademark for a period of 20 years from the signing of contract; and (3) to deliver 100,000 units of raw beans for the franchisee's operation. Based on the evaluation of the contract, it is determined that it is covered by PFRS 15: Revenue from Contracts with Customers. It is determined that the franchisee's three performance obligations under the franchise contract are separate and distinct from each other and need to be accounted for as separate performance obligations. Based on franchisor's data, it is established that the stand-alone selling prices of: (1) Construction of coffee shops is P5,000,000; (2) License to use BosCav's trademark is P2,000,000; and (3) Delivery of raw beans is P3,000,000. On January 1, 2030, the franchisee paid the initial franchise fee. As of December 31, 2030, BosCav Inc. has completed 80% of the coffee shop which already allowed the franchisee to operate. During the said year, BosCay Inc. has already delivered 30,000 units of raw beans to the franchisee. For the year ended December 31, 2030, BosCav Inc. reported sales revenue amounting to P500,000. What is the total revenue to be reported by BosCav Inc. for the year ended December 31, 2030?

Select one:

P4,530,000

P4,050,000

P5,730,000

P5,050,000