ORQUIA, ANNDHREA S.

BSA-22
INTERMEDIATE ACCOUNTING 3
ASSIGNMENT: Chapter 3
PROBLEM 1: True or False
1. False
2. False
3. True
4. True
5. False
6. False
7. False
8. True
9. True
10.True

PROBLEM 2: For Classroom Discussion

1. NO
*Reason: Revenue shall be recognized only when the collectability of the consideration
becomes probable or when either of the following occurs:

a. The entity has no remaining obligations to transfer goods or services to the

customer and all, or substantially all, of the consideration promised by the
customer has been received by the entity and is non-refundable;
b. The contract has been terminated and the consideration received from the
customer is non-refundable.
2. Yes, it is a performance obligation and it is an Explicit promise.
3. Yes, it is a performance obligation and it is an Implicit promise.
4. No, it's not a performance obligation.
5.

Product Estimated Allocation As allocated

stand-alone
selling prices
A 50 (100 x 50/150) 33
B 25 (100 x 25/150) 17
C 75 (100 x 75/150) 50
Total 150 100

6. The performance obligation is satisfied over time, it is because the development of the
professional opinion does not create an asset with alternative use to the entity because
the professional opinion relates to facts and circumstances that are specific to the
customer in which there is a practical limitation on the entity’s ability to readily direct
the asset to another customer. And the entity has an enforceable right to pay for its
performance that is completed to date for its costs plus it's reasonable margin, which
approximates the profit margin in other contracts.

7.
Requirement (a): Total year-end carrying amount
of the assets recognized

Sales Commission ₱ 10,000

Design Service ₱ 40,000
Hardware ₱120,000
Software ₱ 90,000
Migration and testing of data center ₱100,000
Total Year End Carrying Amount of Assets ₱360,000

Requirement (b): Total expense recognized in 20X1

Salaries Expense ₱ 30,000

Total Expense in 20X1 ₱ 30,000
8.
Jan. 1,
20x8
No entry
Jan. 3,
20x8
Contract asset (₱ 1,000 x 480/1,200a) ₱400
Revenue ₱400
Mar. 31,
20x8
Receivable ₱1,000
Contract asset ₱400
Revenue (₱1,000 x 720/1,200a) ₱600
Apr. 8,
20x8
Cash ₱1,000
Receivable ₱1,000

9.

Produc Stand- Allocation As Discount

t alone prices allocate
d
A 40 N/A 40 -
B 55 (60 x 55/100) 33 22
C 45 (60 x 45/100) 27 18
D N/A (130K - 40K - 33K - 27K) 30 -
Total 140 130 40

10.
Dat Cash ₱10,000
e Revenue (₱ 10,000 x 97%) ₱9,700
Refund liability (₱ 10,000 x 3%) ₱300
Dat Cost of goods sold (97 x ₱60) ₱5,820
e Asset for right to recover product to be returned (3 x ₱60) ₱180
Inventory (100 x ₱60) ₱6,000
11.
At the inception of a contract, entity recognizes a contract liability:
Dat Cash ₱4,000
e Contract Liability ₱4,000

During the 2 years from contract inception under the transfer of the asset, entity
must determine the purchased amount of the consideration, increase the contract
liability by recognizing the interest in ₱4,000 at 6% for two years.

Interest on year 1: 240 (4000 x 6%)

Interest in year 2: 254.40 (4000 + 240 x 6%)
Combined Interest: 494.40
Dat
e
Interest Expense ₱494.40
Contract Liability ₱494.40

At the state of transfer of assets to customer:

4000 + 494. 40 = ₱ 4494.40
Dat
e
Contract Liability ₱4,494.40
Revenue ₱4,494.40