Reference no: EM133021066

Questions -

Q1. SG, a partner in a partnership that carries the name of the JAA, has a 30% participation in partnership profit. Her capital account had a net decrease of P48,000 during 2021. In the same year, she withdrew P104,000 of capital and contributed property valued at P20,000 to the partnership. The net income of the partnership in 2021 was:

a. P 36,000

b. P132,000

c. P120,000

d. P440,000

Q2. On December 1, 20x1, XYZ Co. granted a 5-year franchise right to ABC, Inc. for an initial franchise fee of 400,000. The non-refundable initial franchise fee was collected in full upon signing of the contract. As of December 31, 20x1, XYZ has no remaining obligation or intent to refund any of the cash received, all of the services pertaining to pre-opening activities to set-up the contract have been performed and there are no other material conditions or obligations required of XYZ under the franchise agreement.

If the promise to grant the franchise right is distinct and that the grant of franchise provides the customer the right to use the entity's intellectual property, how much revenue shall XYZ recognize in December 20x1?

a. 400,000

b. 80,000

c. Zero

d. 6,667.67

Q3. On January 2, XYZ, Inc. enters into a contract with ABC & Co. for the sale of an excavator for P42,000,000. The contract includes a put option that obliges XYZ, Inc. to repurchase the excavator at ABC & Co.'s request for P37,800,000 on or before December 31 of the same year. The market value is expected to be P38,000,000 on December 31. ABC & Co. pays XYZ, Inc. P42,000,000 on January 1. The transaction will most likely include which of the following entries:

a. Debit to Right-of-Use Asset and Credit to Lease Liability

b. Credit to sales revenue for P37,800,000

c. Credit to Financial Liability for 42,000,000

d. Credit to Refund Liability for the estimated returns

Q4. When merchandise was shipped by the consignor to the consignee and freight on shipment was paid by the latter, then:

a. The total cost of the merchandise will increase.

b. Freight in is properly recognized by the consignee.

c. Sale is properly recognized by the consignor.

d. The risk and reward over the merchandise is transferred to the recipient of goods.