Reference no: EM133035483

Question -

Q1. On May 31, 2020, Win grants Bright the right to operate as a franchisee of "2gether Spa" for a nonrefundable upfront fee of P2,400,000 and 3% royalty fee based on Bright's annual sales. Win in return will (1) assist Bright in locating the site, (2) provide supplies and equipment, and (3) allow Bright to use the tradename for 10 years. Bright's income for the year totaled P1,000,000. Win has no performance obligation (PO) remaining as of year-end and was able to recognize income of P28,000 from PO#3. Win determined that each PO is separate and distinct from one another and follows PFRS 15, accordingly. How much is the total revenue recognized by Win for the year ended 2020?

Q2. Honesty Company established an agency in Cebu City sending its merchandise samples costing P90,000 and a working fund of P50,000 to be maintained on an imprest balance on April 15, 2020. During the month of April, the agency transmitted to the home office sales orders costing P468,750. However, the home office was able to fill-up only 80% of the orders. Total cash of P250,000 was collected from the customers. A home office disbursement chargeable to the sales agency includes the acquisition of equipment for Cebu agency, P180,000 to be depreciated at 10% per annum. The agency paid expenses of P43,700 and received replenishment thereof from the home office. The agency samples are good for one year only. It was estimated that the gross profit on goods shipped to agency averages 25%. How much is the net income (loss) of the agency?