P.S.: Please provide solutions and explanations

On January 1, 2018, PLDC enters into a wireless contract in which customer MBP is provided with handset and a voice and data plan for P 3,500 per month. PLDC identified

the handset and wireless plan as separate performance obligations.

The handset can be separately sold by PLDC for a price of 20,000 which provides

observable evidence of stand-alone selling price. PLDC offers a 12-month service plan

without a phone that includes the same level of services for a price of P 2,500 per month.

1. How much is the total transaction price to be allocated to the separate performance

obligation?

a. P 20,000

b. P 30,000

c. P 42,000

d. P 50,000

2. How much of the transaction price is to be allocated to the wireless plan?

a. P 16,800

b. P 22,000

c. P 25,200

d. P 30,000

3. How much of the transaction price is to be allocated to the handset?

a. P 16,800

b. P 20,000

c. P 22,000

d. P 25,200

4. On January 1, 2018, what is the entry at the inception of the contract?

a. Receivable 42,000

Revenue 42,000

b. Receivable 42,000

Equipment Revenue 16,800

Service Revenue 25,200

c. Contract Asset 16,800

Equipment Revenue 16,800

d. Receivable 25,200

Contract Asset 16,800

Equipment Revenue 16,800

Service Revenue 25,200

5. On January 31, 2018, what is the entry to record the monthly billing of monthly fee?

a. Receivable 3,500

Revenue 3,500

b. Receivable 3,500

Equipment Revenue 1,400

Service Revenue 2,100

c. Receivable 3,500

Service Revenue 2,100

Contract Asset 1,400

d. Cash 3,500

Receivable 3,500