Answer the following: (5-10) and 1-2 only thank you

333 PROBLEMS PROBLEM 1: TRUE OR FALSE EM 2: MULTIPLE CHOICE - THEORY "Step 2" of the revenue recognition under PFRS 15 is PROPTag Co. enters into a of the transaction price to the performant struction contract with a customer. ies 15 requires e-Tag to do all of the following at Proption, except obligations in the contract. 2. According to PFRS 15, each promise to deliver a distinct go inassess the customer's ability a contract price on due date. or service in a contract is treated as a separate performad obligation. b. assess whether the promised goods and services in the Entity X enters into a contract to build a house for a custom contract are individually dis 3. E The contract identifies the customer as the 'owner and determine if the performance obligation(s) identified in the entitled to any asset created in case the contract is terminals contract is(are) satisfied over time or at a point in time. before completion. Entity X's performance obligation is mos d. estimate the total construction costs at completion. likely to be one that is satisfied at a point in time. Revenue from a performance obligation that is satisfied over Which of the following is incorrect reg revenue recognition under PERS regarding 'Step 2' of the time is recognized as the entity progresses towards h complete satisfaction of the performance obligation. a. An entity shall treat each promise in a contract to transfer a distinct good or service as a separate performance Fact pattern: obligation . Entity A, a construction firm, uses the percentage of completion An entity shall treat a promise to transfer a distinct bundle method to account for its construction contracts. Entity A of goods or services as a separate performance obligation. measures its progress on a contract using the 'cost-to-cost c. An entity shall treat a promise to transfer a series of method. During the year, Entity A started work on a P10M fixed distinct goods or services that are substantially the same price contract and incurred contract costs of P4M. The estimated and have the same pattern of transfer to the customer as a total contract costs are P8M. separate performance obligation An entity shall tre 5. Entity A recognizes zero revenue for the year because the eat all promises in a single contract as a contract is not yet complete. single performance obligation regardless of the nature of those promises, if those promises are negotiated with the 6. Entity A recognizes gross profit of PIM for the year customer as a single package. 7. The percentage of completion under a construction contract is 3. Window Co. enters into a 5-year construction contract with a always computed based on the costs incurred to date as they customer. At contract inception, Window determines its bear to the expected total costs at completion. performance obligations in the contract and concludes that it 8. Contract assets and receivables are the same. has a single performance obligation. Window also determines 9. A contract liability is recognized if an entity bills a customer that its performance in the contract creates an asset that the before the transfer of a promised good or service. customer controls as the asset is created. The asset created has 10. A contract asset is recognized if an entity's right to no alternative use to Window and Window has an enforceable consideration is unconditional. 334 Chapter 7 instruction Contracts 335 right to payment for performance completed to date. Window would most likely recognize revenue from the contract equal to the costs of construction recognized during the over the 5-year period by measuring its progress towards Poual to the contract price divided by the estimated the complete satisfaction of the performance ob " construction b. when the construction is completed and the promise . equal to the costs of construction and services are transferred to the customer. e probable truction recognized during the period that are probable of recovery . c. using the percentage of completion, because this is the method required by PFRS 15 on all long-term construction In the construction of complex structures wherein the costs contracts incurred and other efforts expended on the contract do d. either a or b as a matter of accounting policy choice. of the contract do not correlate to the stage of completion of the project, the most appropriate method for measuring progress on the contract is 4. An entity uses an input method based on costs incurred to . input method based on costs. c. zero-profit method measure its progress on a performance obligation that is b. output method. d. complex method. satisfied over time. Which of the following items would most likely affect the entity's computation for the revenue to be A long-term construction contract becomes onerous. What is recognized each year ? the effect of the event on the entity's profit for the year under Revenue previously recognized Progress billings to date each of the following scenarios ? a. Yes Yes The performance obligation in the contract is satisfied: Yes No Over time and a Over time and no At a point in No Yes reasonable measure of reasonable measure of time No No progress is available progress is available a. decrease decrease decrease 5. An entity's performance obligation under a long-term b. decrease no effed decrease construction contract will be satisfied over time. Revenue is c. decrease no effect no effect recognized when recorded progress billings d. decrease decrease no effect are collected. exceed recorded costs. a. Yes Yes 9. An entity enters into a contract with a customer to build an b. No asset for PIM. In addition, the terms of the contract include a C. No No penalty of P100,000 if the construction is not completed within Yes No three months of a date specified in the contract. Which of the (AICPA - Adapted) following statements is correct? a. The transaction price is a fixed amount of P900,000 6. Under the zero-profit method, contract revenue for the period b. The transaction price includes a fixed amount of is P1,000,000 and a variable amount of P100,000. a. equal to zero. c. The transaction price includes a fixed amount of P900,000 and a variable amount of P100,000