2. Answer the following questions.

(1) Entity G, a janitorial services provider, enters into a contract with a customer to provide cleaning services for a two year period, starting from January 1, 2018.

Upon the initial signing of the contract, Entity G pays a salesperson a $200 commission for obtaining the new customer contract. An additional commission of $120 is paid each time the customer renews the contract for an additional two years. Based on its historical experience, 98% of customers renew their contract for at least two more years or four years total. The average customer relationship is four years.

Required: Calculate the commission expenses under U.S. GAAP for the first two years assuming that customers renew their contract for at least two more years.

2018:

2019:

(2) Entity A enters into 1000 homogenous contracts with different customers for fixed consideration of $1,000 each. Before entering into a contract with a customer, Entity A performs procedures designed to determine whether it is probable that the customer will pay the amount owed under the contract (e.g., a credit check) and only enters into the contract if the entity concludes that it is probable that customer will pay. During the previous three years, Entity A has collected 65% of the amounts it has billed to customers.

Required: Calculate the GROSS REVENUE for Entity A from the above transactions assuming that Entity follows:

U.S. GAAP:

IFRS: