Question
Blair Biotech enters into a licensing agreement with Pang Pharmceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug
Blair Biotech enters into a licensing agreement with Pang Pharmceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experince in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial. Determine the transaction price of the arrangement. Assuming that regulatory approval was granted on December 20, 2017, and that Blair received payment from Pang on January 15, 2018, prepare the journal entries for Blair. The license meets the criteria for point-in-time revenue recognition.
| Shaw Company sells goods that cost $300,000 to Ricard Company for $410,000 on January 2, 2017. | ||||||
| The sales price includes an installation fee, which has a standalone selling price of $40,000. The | ||||||
| standalone selling price of the goods is $370,000. The installtion is considered a separate | ||||||
| performance obligation and is expected to take 6 months to complete. | ||||||
| Prepare the journal entries (if any) to record the sale and cost of goods sold on January 2, 2017. | ||||||
| Shaw prepares an income statement for the first quarter of 2017, ending on March 31, 2017 | ||||||
| (installation was not completed until June 18, 2017). How much revenue should Shaw recognize | ||||||
| related to its sale to Ricard? | ||||||
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