ng for a PROBLEM 6: MULTIPLE CHOICE - COMPUTATIONAL Use the following information for the next two questions: Fact pattern ANCILLIARY Co. and SUBORDINATE, Inc. are provincial contract distributors of oil. ANCILLIARY's principal place of business is located in Town One while SUBORDINATE's principal place of are not 210 business is located in Town Two. However, each of the distributors operates in both towns. During the year, a bridge connecting these two towns has been damaged. Wary of the disruption of their business operations, ANCILLIARY and SUBORDINATE agreed to exchange inventories of oil so that each could maintain its operations in both towns. b. Sold goods agreement the produc sale provid be refunde estimate th Case #1: 1. ANCILLIARY agreed to exchange its inventory of "premium" oil in Town One with SUBORDINATE's inventory of "diesel oil in Town Two. ANCILLIARY's "premium" oil has a fair value of P4M and carrying amount of P3.5M while SUBORDINATE's "diesel" oil has a fair value of P3.8M. How much shall ANCILLIARY recognize from the inventory exchange? a. 3,800,000 revenue d. 500,000 gain b. 4,000,000 revenue c. 200,000 gain c. Sold goods sale agreer of the proc sale provid estimate tl d. Sold good agreemen be refund reliably es Sold goo e. 0 P10,000. based on b. 4,000,000 revenue c. 200,000 gain e. 0 P10,000. based or How much transactions a. 42,300 Case #2: 2. ANCILLIARY agreed to exchange its inventory of "diesel" oil in Town One with SUBORDINATE's inventory of "diesel" oil in Town Two. ANCILLIARY's "diesel" oil has a fair value of P4M and carrying amount of P3.5M while SUBORDINATE's "diesel" oil has a fair value of P3,992,000. The exchange lacks commercial substance. How shall ANCILLIARY recognize from the inventory exchange? a. 3,992,000 revenue d. 500,000 gain b. 4,000,000 revenue e. O c. 200,000 gain 4. DESULT manufact During th . In Jar contr is due servic price assess DESU uncoll a 3. ABC Co. had the following transactions during the year: Sold goods to Customer W on an installment basis for P5,000 Legal title to the goods was retained by ABC. The installment receivables are collectible over the next eight months. In Jul custor Revenue from Contracts with Customers b. Sold goods to Customer X on a cash basis for P20,000. The sale agreement gives Customer X the right to retum up to 40% of the product sold within the first six months after the date of sale provided an appropriate reason is given. Customer X will 4. DESULTORY UNPLANNED Co. offers repair services for manufacturing equipment and also sells machinery parts. During the year, DESULTORY had the following transactions. In January 20x1, DESULTORY Co. signed a repair service contract with a customer for P4,000,000. The contract price is due on March 31, 20x1. By the end of the year, the repair service has long been completed. However, the contract price has not yet been collected. DESULTORY has assessed that the receivable should be written-off. DESULTORY has no balance in its allowance for uncollectible service contract receivables In July 20x1, DESULTORY Co. sold various parts to a customer on account for P2,000,000. By the end of the years 211 be refunded for any goods returned. ABC can reliably estimate that 10% of the products sold would be retumed. Sold goods to Customer Y on account basis for P10,000. The sale agreement gives Customer Y the right to retum up to 10% of the product sold within the first two weeks after the date of sale provided an appropriate reason is given. ABC can reliably estimate that 5% of the products sold would be returned. d. Sold goods to Customer Z on a cash basis for P12,000. The sale agreement gives Customer Z the right to return the goods and be refunded for the sale price if he is not satisfied. ABC cannot reliably estimate the amount of goods to be retumed. Sold goods to Customer Voiz&Gurlz on a cash basis for P10,000. The sales representative was paid a 2% commission based on the selling price. How much total net sales revenue is recognized from the transactions above? a. 42,300 d. 54,500 c. 54,300 b. 42,500 il d Es 5 6. The cash selling price of the merchandise is 27,900. Under PFRS 15, how much revenue should Khaki recognize in pra 18 price of the merchandise is not dins swever. Khaki has an imputed rate of intens 212 only half of the receivable from the customer has been collected. DESULTORY assessed that 5% of the outstanding balance as of December 31, 20x1 is doubtful of collection How much revenue from the transactions described above shall be included in DESULTORY's statement of profit or loss and other comprehensive income for 20x1? a. 6,000,000 c. 1,900,000 c. 1,100,000 d. 0 5. The Ordessos Company sells goods to a third party via an agent. During 20x8 Ordessos supplies the agent with goods with a sales value of P200,000. The agent charges a commission of 15%. Under PFRS 15 how much revenue should each of Ordessos and the agent recognize in profit or loss for 20X8? Ordessos Agent a. 170,000 25,500 b, 200,000 25,500 c. 170,000 30,000 d. 200,000 30,000 (Adapted) Fact pattern The Khaki Company sells merchandise for P8,000 to a customer or 31 December 20x7. The terms of the sale agreement state thur payment is due in one year's time. Case 1 for the year ended 31 December 20X7? b.7,339 c. Nil d. 8.000 Repertue from Contracts with Customers 10. On 1 January 20X8 The Violet Company signs a four-year foed-price contract to provide services for a customer. The contract value is P550,000. At 31 December 20X8 the contract is thought to be 30% complete. Costs to complete the contract cannot be reliably estimated and costs incurred to date of 7152.000 are recoverable from the customer. What is the revenue to be recognized in profit or loss for the year ended 31 December 20X8, according 213 g%. Under PFRS 15, how much revenue should Khaki recognize in profit or loss for the year ended 31 December 20X7? a. 8,720 (Adapted) b. 7,339 c. Nil d. 8,000 Case 3 8. The cash selling price of the merchandise is 27,900 and Khaki has an imputed rate of interest of 9%. However, Khaki opts to use the practical expedient allowed under PFRS 15. How much revenue should Khaki recognize in profit or loss for the year ended 31 December 20X7? a. 8,720 b.7,339 d. 8,000 Adapted) c Nil 9 The Marfak Company provides service contracts to customers for maintenance of their electrical systems. On 1 October 20x8 it agrees a four-year contract with a major customer for P154,000. Costs over the period of the contract are reliably estimated at P51,333. Under PFRS 15, how much revenue should the company recognize in profit or loss in the year ended 31 December 20X8? d. 12,833 b. 38,500 c.3.208 2.9,625 Weed to PFRS 15 Revenue from Contracts toith Customers? 213,000 c. 137,500 d. 165,000 b. 152.000