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Journal Entries & PFRS 15 Analysis

This document contains problems and solutions related to accounting for deferred revenue. Problem 33 involves the recognition of deferred franchise fees, license revenue, and sales revenue from a transaction. The transaction results in cash received of $750,000, notes receivable of $600,000, and deferred revenue amounts for franchise fees of $594,375, license revenue of $90,000, and sales revenue of $380,000 and $280,000.

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52 views3 pages

Journal Entries & PFRS 15 Analysis

This document contains problems and solutions related to accounting for deferred revenue. Problem 33 involves the recognition of deferred franchise fees, license revenue, and sales revenue from a transaction. The transaction results in cash received of $750,000, notes receivable of $600,000, and deferred revenue amounts for franchise fees of $594,375, license revenue of $90,000, and sales revenue of $380,000 and $280,000.

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For Purpose
Copyright
© © All Rights Reserved
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THEORIES

NO. ANSWER PROBLEM 5


13 C 1-2'
The critea for PFRS 15 was not met, because it pr
14 C consider
30 A
PROBLEMS
NO. ANSWER JOURNAL ENTRY
5.1 A. 0 2-Jan Cash
5.2 A. 0 Notes Receivable
33.1 C. Debit Notes Receivable of P600,000 Deferred Franchise Revenue
33.2 D. P750,000 Unearned Interest Income
33.3 B. P722,500

PROBLEM 33
1 Cash
Notes Receivable
Unearned License Revenue -
Unearned Sales Revenue - Eq
Unearned Sales Revenue - Tra
2 Soft ware
Equipment
Training
TOTAL
SOLUTION

S 15 was not met, because it prove that the collection is not probable. That's why we don't recognize revenue and any amount of
consideration received is recorded as liability (Deferred Revenue).

187,500 Present value of note (2.17 x 187,500)


750,000 Add: Down Payment
Deferred Franchise Revenue 594,375 ADJUSTED FRANCHISE FEE
Unearned Interest Income 343,125
Face Value of Note (937,500-187,500)
Present Value of Note
Unearned Interest Income

150,000 3 Software (90,000/5yrs x 5/12)


600,000 Equipment
Unearned License Revenue - software 90,000 Training
Unearned Sales Revenue - Equipment 380,000 Interest Income (600,000 x 10% x 11/12)
Unearned Sales Revenue - Training 280,000 TOTAL
PHP 90,000
PHP 380,000
PHP 280,000
PHP 750,000
venue and any amount of

PHP 406,875
PHP 187,500
PHP 594,375

PHP 750,000
PHP 406,875
PHP 343,125

PHP 7,500
PHP 380,000
PHP 280,000
PHP 55,000
PHP 722,500

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