5-Step Process Globemart. Inc., a telecommunications operator, entered into a contract with Kim Dorothy on March 1, 2037. In line with the contract, Kim Dorothy subscribes for Globemart’s monthly plan for 12 months and in retuin.Kim Dorothy receives a free Apple IPhone handset from Globemarl. Kim Dorothy wil Pay a monthly fee of P1,200. Kim Dorothy gets the handset immediately after contract signature. Globemart sells the same handsets for P3,600 and the same monthly plans for P800 per month without handset.Contract Liability and Recelvable On January 1, 2019, Castano enters into @ non-cancellable contract with Recio for the sale of an excavator for P700,000. The excavator will be delivered to Recio on April I. 2019. The contract requites Recio fo pay the P700,000 in advance on Febiuary 1, 2019 and Recio makes the payment on March 1, 2019.: Variable Consideration Thomas Consultants provided Bran Construction with assistance in implementing various cost-savings initiatives, Thomas' contract specifies that it will receive a flat fee of 50,000 and an additional 20,000 if Bran reaches a pre-specified target aroun! of cast savings. Thomas estimates that there is 0. 20%chance that Bran will achieve the cost-savings large!. 1. Assuming Thomas uses the expecied value a its estimate of variable consideration, calculate the transaction price. a. P20,000 c. P54,000 ib.” P50,000 ae 3. P70,000 its estimate of variable consideration, calculatethe 2. Assuming Thomas uses the mos' likely value as transaction price. ; ; a. 20,000 c. P54,000 b.__ P50,000 om d, P70,000 led value as its estimate of variable Consideration, but is very 3. Assume Thomas uses the expect fo a lack of experience wilh similar consulting arangements. uncertain of that estimate due Calculate the transaction price. ‘a. * P20,000 . c. 54,000 rn P50.000 a d. P70,000TV On September 1, 2028, Ivana Company sold goods to Alawi Company in exchange for a 4-year, noninterest bearing note with a face amount of P 500,000. The goods have a cost on Ivana’s book of P 200,000. Required: 4. How much is the transaction price and gross profit if the cash selling price of the goods is P 300,000? 2. How much is the transaction price and gross profit if the cash selling price is not available? (present value factor of ordinary annuity of 1 for four periods is 0.683 based on an imputed rate of 10%)Time Value of Money: + lf payment happens before or after delivery, transaction has a financing component. If that is significant, have to account for it. = Ifpayment before delivery, seller is getting a loan, so recognize interest expense. = Ifpayment after delivery, seller is giving a loan, so recognize interest revenue. ‘= Presume not significant if payment and delivery separated by less than one year. 1. Assume a contract for the sale of goods species that payment is to be made four months after delivery of a product. The sellers likely to do which of the following, with respect to the time value of money over the life of the contract? a. Recognize interest expense. b. Recognize interest revenue. c. Recognize additional cost of goods sold, d. Ignore the time value of money.Globe Telecom, Inc., a telecommunications operator, entered into a contract with Rain on March 1, 2027. In line with the contract, Rain subscribes for Globe Telecom's monthly plan for 24 months and in return Rain receives a free Apple 256 GB Iphone 11 Pro Max handset from Globe Telecom. Rain is also entitled for monthly network services such as 150 GB of data, unlimited all-net text, unlimited calls to Globe/TM, and 150 minutes all-net calls. Rain will pay a monthly fee of P 2,499 and a cash out of P 46,800 upon signing of the contract. Rain gets the handset immediately after contract signing. Globe Telecoms normally sells monthly plans for P 1,482 per month without handset. The market value of the Iphone 11 Pro Max is P 82,990. Required: Assuming the Globe Telecom ask you to apply IFRS 15 with its transaction with Rain. Apply the 5 steps process to recognize revenue and determine the revenue for the year 2027.