Reference no: EM132652199
Question - COMPREHENSIVE PROBLEM
On January 1, 2018, PLDC enters into a wireless contract in which customer MBP is provided with handset and a voice and data plan for P 3,500 per month. PLDC identified the handset and wireless plan as separate performance obligations.
The handset can be separately sold by PLDC for a price of 20,000 which provides observable evidence of stand-alone selling price. PLDC offers a 12-month service plan without a phone that includes the same level of services for a price of P 2,500 per month.
Q1. How much is the total transaction price to be allocated to the separate performance obligation?
a. P 20,000 b. P 30,000 c. P 42,000 d. P 50,000
Q2. How much of the transaction price is to be allocated to the wireless plan?
a. P 16,800 b. P 22,000 c. P 25,200 d. P 30,000
Q3. How much of the transaction price is to be allocated to the handset?
a. P 16,800 b. P 20,000 c. P 22,000 d. P 25,200
Q4. On January 1, 2018, what is the entry at the inception of the contract?
a. Receivable 42,000 Revenue 42,000
b. Receivable 42,000 Equipment Revenue 16,800 Service Revenue 25,200
c. Contract Asset 16,800 Equipment Revenue 16,800
d. Receivable 25,200 Contract Asset 16,800 Equipment Revenue 16,800 Service Revenue 25,200
Q5. On January 31, 2018, what is the entry to record the monthly billing of monthly fee?
a. Receivable 3,500 Revenue 3,500
b. Receivable 3,500 Equipment Revenue 1,400 Service Revenue 2,100
c. Receivable 3,500 Service Revenue 2,100 Contract Asset 1,400
d. Cash 3,500 Receivable 3,500