Question #1

James Lee, M.D., keeps his accounting records on a cash basis. During 2017, Dr. Lee
collected P100,000 in fees from his patients. At December 31, 2007, Dr. Lee had
accounts receivable of P20,000. At December 31, 2017, Dr. Lee had accounts
receivable of P30,000, and unearned fees of P1,000. On an accrual basis, how much
was Dr. Lees patient service revenue for 2017?
109,000

Question #2
A franchise agreement grants the franchisor an option to purchase the franchisees
business.It is probable that the option will be exercised. When recording the initial fee,
the franchisor should
record the entire initial franchise fee as a deferred credit which will reduce the
franchisors investment in the purchased outlet when the option is exercised.

Question #3
The Janice Company employs the perpetual inventory basis in its accounting for new
cars. On August 15, 2015, a new car was sold to Rose Castro with a list price of
220,000 costing 165,000. It granted Ms. Castro an allowance of 85,000 for her old car
as trade-in, the current value of which was estimated to be 81,700. The balance of
135,000 was payable as follows: Cash at time of purchase 35,000, balance in 20
monthly payment of 5,000, first payment being made on September 1, 2015. On April 1,
2016, Ms. Castro defaulted in the payment of March 1, 2016 installment. The new car
sold was repossessed; its value to the seller is 40,000 (use two decimal places for gross
profit percentage)
The total realized gross profit on installment sales in 2015 is
32,617

Question #4
On October 1, 2016, Price Corp., a real estate developer, sold land to Greene Co. for
P5,000,000. Greene paid P600,000 cash and signed a 10-year P4,400,000 note
bearing interest at 12%. The carrying amount of the land was P4,000,000 on date of
sale. The note was payable in forty quarterly principal installments of P110,000
beginning January 2, 2017. Price appropriately accounts for the sale under the cost
recovery method. On January 2, 2017, Greene paid the first principal installment of
P110,000 and interest of P132,000. For the year ended December 31, 2016, what total
amount of income should Price recognize from the land sale and financing?
0

Question #5
In a construction contract, the term "variation" means
An instruction by the customer for a change in the scope of work to be performed under the
construction contract.

Question #6
Nalyn, Inc. is a retailer of washers and dryers and offers a three-year service contract
on each appliance sold. Although Dot Point sells the appliances on an installment basis,
all service contracts are cash sales at the time of purchase by the buyer. Collections
received for service contracts should be recorded as
deferred service revenue.

Question #7
Under what condition is it proper to recognize revenues prior to the sale of the
merchandise?
When the ultimate sale of the goods is at an assured sales price.

Question #8
North Co. entered into a franchise agreement with South Co. for an initial fee of P50,000. North
received P10,000 at the agreements signing. The remaining balance was to be paid at a rate of
P10,000 per year, beginning the following year. Norths services per the agreement were not
complete in the current year. Operating activities will commence next year. What amount should
North report as franchise revenue in the current year?
0
Question #9
Revenue from a contract with a customer
cannot be recognized until a contract exists.

Question #10
Dickie Corporation contracted to build a building for Dickson Company. The contract
price was P500,000 and Dickie estimated that construction costs would total P420,000.
The construction period lasted until September 1, 2015. Costs during the each period,
estimated total cost of the product at the end of the year, billings and cash collected
during the year were as follows:
  2015 2016 2017
Cost during the period 105,000 195,000 125,000
Estimated or actual total costs 420,000 425,000 425,000
Billings during the period 100,000 150,000 250,000
Cash collected during the 80,000 140,000 260,000
period
The amount of gross profit recognized in 2016 using the percentage of completion
method must be:
32,942.50

Questi
on #11
Which of the following is not a condition that needs to be satisfied prior to recognising
revenue from the rendering of services using the percentage of completion method?
the contract is non-cancellable.
Question #12
For financial statement purposes, the installment method of accounting may be used if
the
Ultimate amount collectible is indeterminate.

Question #4
Rene Company sold a computer on installment basis on October 1, 2016. The unit cost
to the company was 86,400, but the installment selling price was set at 122,400. Terms
of payment included the acceptance of a used computer with a trade-in allowance of
43,200. Cash of 7,200 was paid in addition to the trade-in computer with the balance to
be paid in ten monthly installments due at the end of each month commencing the
month of sale.
It would require 1,800 to recondition the used computer so that it could be resold for
36,000. A 15% gross profit was usual from the sale of used computer. The realized
gross profit from the 2016 collections amounted to:
11,520

Questi
on #5
A sale should not be recognized as revenue by the seller at the time of sale if
the buyer has a right to return the product and the amount of future returns cannot be
reasonably estimated.

Question #6
Unconditional rights to receive consideration because a performance obligation has
been satisfied are
reported as a receivable on the statement of financial position.

Question #7
Which one of the following is a correct statement in relation to PFRS 15 Revenue from
Contracts with Customers?
The expected value method requires an entity to identify the probability of each possible
outcome of a contract occurring.

Question #8
Minyong, Inc. began operations on January 1, 2016 and approximately uses the
installment method of accounting. The following data are available for 2016:
Installment accounts receivable, 12/31/2016 600,000
Installment sales for 2016 1,050,000
Gross profit on sales 40%
Under the installment method, Minyong’s deferred gross profit at December 31, 2016
would be
240,000

Question #13
On June 1, 2020, Johnson & Sons sold equipment to James Landscaping Services. In
exchange for a zero-interest bearing note with a face value of P55,000, with payment
due in 12 months. The fair value of the equipment on the date of sale was P50,000. The
amount of revenue to be recognized on this transaction in 2020 is
50,000 sales revenue and P2,917 interest revenue