Uranus Limited ('Uranus') sells tablet computers to various tertiary institutes with a return policy in a...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Uranus Limited ('Uranus') sells tablet computers to various tertiary institutes with a return policy in a given period. The following are selected transactions and events of Uranus during the year ended 31 March 2022. On 16 December 2022, Uranus signed a contract and sold 2,350 tablet computers for $3,000 each on account to Lion Rock University ("Lionrock'). Uranus allowed Lionrock to return any unopened tablets within 6 months of purchase. The cost of each tablet computer was $1,600. Uranus estimated that: i 80 tablet computers would be returned. ii The cost of recovering the products to resale would be immaterial. iii The returned tablets were expected to be resold at a profit. On 24 February 2023, Lionrock returned 48 tablet computers. On 31 March 2023, Uranus prepared financial statements for month end reporting and determined that it was likely that only 32 more tablets would be returned. Hence, Uranus was still under the assumption that the most likely outcome was 80 tablet computers in total would be returned at the end. Required: a Briefly explain how to apply the five-step process in the revenue recognition for Uranus under HKFRS 15 Revenue from Contracts with Customers. (10 marks) b Explain the accounting treatment (with journal entries) for the sale of the tablets and the related cost of goods sold on 16 December 2021 and the return of the tablets on 24 February 2023. (10 marks) e On 31 March 2023, if Uranus believed the original estimate return from the order of Lionrock is still correct, explain how to account for expected returns at 31 March 2023 with appropriate accounting treatment. (3 marks) d Prepare the journal entries if the following situations happened independently on 31 May 2023: i 52 more tablets were returned. ii 32 more tablets were returned. iii No more tablets were returned. (6 marks) (3 marks) (3 marks) e Describe the treatment of revenue of Uranus if the tablet computer is sold in a bundle with a one-year warranty, which the warranty can be separately purchased at $300 for a year. No accounting entries is to be prepared. (5 marks) Uranus Limited ('Uranus') sells tablet computers to various tertiary institutes with a return policy in a given period. The following are selected transactions and events of Uranus during the year ended 31 March 2022. On 16 December 2022, Uranus signed a contract and sold 2,350 tablet computers for $3,000 each on account to Lion Rock University ("Lionrock'). Uranus allowed Lionrock to return any unopened tablets within 6 months of purchase. The cost of each tablet computer was $1,600. Uranus estimated that: i 80 tablet computers would be returned. ii The cost of recovering the products to resale would be immaterial. iii The returned tablets were expected to be resold at a profit. On 24 February 2023, Lionrock returned 48 tablet computers. On 31 March 2023, Uranus prepared financial statements for month end reporting and determined that it was likely that only 32 more tablets would be returned. Hence, Uranus was still under the assumption that the most likely outcome was 80 tablet computers in total would be returned at the end. Required: a Briefly explain how to apply the five-step process in the revenue recognition for Uranus under HKFRS 15 Revenue from Contracts with Customers. (10 marks) b Explain the accounting treatment (with journal entries) for the sale of the tablets and the related cost of goods sold on 16 December 2021 and the return of the tablets on 24 February 2023. (10 marks) e On 31 March 2023, if Uranus believed the original estimate return from the order of Lionrock is still correct, explain how to account for expected returns at 31 March 2023 with appropriate accounting treatment. (3 marks) d Prepare the journal entries if the following situations happened independently on 31 May 2023: i 52 more tablets were returned. ii 32 more tablets were returned. iii No more tablets were returned. (6 marks) (3 marks) (3 marks) e Describe the treatment of revenue of Uranus if the tablet computer is sold in a bundle with a one-year warranty, which the warranty can be separately purchased at $300 for a year. No accounting entries is to be prepared. (5 marks)
Expert Answer:
Answer rating: 100% (QA)
a Applying the fivestep process in revenue recognition for Uranus under HKFRS 15 Revenue from Contracts with Customers Step 1 Identify the Contract Uranus identified the contract with Lion Rock Univer... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
Students also viewed these accounting questions
-
KINGBIRD INC. Statement of Retained Earnings Year Ended July 31, 2024 Retained Earnings, August 1, 2023 Add Profit/(Loss) for the Year Less Cash Dividends $ 366,080 $ Retained Earnings, July 31, 2024...
-
A 160-day note has a Face Value of $11,000 and a rate of 9.5%. A partial payment of $2,100 is made after 30 days. A second partial payment of $3,000 is made 15 days after the first one. Find the...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
What constant should replace the question mark in this system so that the solution set is {(1, 1, 1)}? 2x - 3y + -5x + 2y z = 0 - 2 = x + y + 2z = ? 4 -4
-
The following data are based on information from the Regis University Psychology Department. In an effort to determine if rats perform certain tasks more quickly if offered larger rewards, the...
-
A company used cash to pay employees and received cash from performing services. In which section of the statement of cash flows would the cash flows from these activities be reported?
-
What are the three manufacturing cost elements of a finished product?
-
Jill operates a sporting goods store in a rented location at a shopping mall. She is insured under a CGL policy with the following limits: General aggregate limit ............. $1,000,000...
-
Zero-coupon bond with 20 years left to maturity A 10%, 20-year annual bond has a Macaulay duration of 10.18 years. Assume that the market interest rates are at 8 percent. Calculate these bonds value...
-
Ho Chee makes ice cream in two sequential processes: Mixing and Blending. Direct materials enter production at the beginning of each process. The following information is available regarding its...
-
Kamal, the CEO a food processing company, hires you to represent her company in the purchase of an industrial property for its new processing plant. She is interested in a vacant warehouse in the...
-
For each one of the following statements, indicate whether the statement is true of false. a. A CPA firm should adopt adequate policies and procedures on client acceptance, but the only one that is...
-
Look at the sketch of three production isoquants in the figure below. What do the shape of these isoquants tell you about the relationship between capital and labour in this particular instance?...
-
The CPA firm of Gleim & Co. has been approached by the following potential clients: a. Columbus Entertainment Inc., which recently made news in the financial press when its board of directors...
-
The Topper Restaurant uses a flexible budget to estimate profit in each month. The restaurant expects to charge \($15\) per meal on average. Some costs are assumed to vary with the number of meals...
-
The following questions relate to several of the factors that affect the auditor's general planning decisions. Select the best response. a. Which of the following underlies the application of...
-
Define the following terms: a. Substantive Law b. Procedural Law c. Public Law d. Private Law e. Civil Law f. Torts g. Criminal Law h. Common Law i. Constitutional Law j. Case Law k. Statutory Law
-
The executor of Gina Purcells estate has recorded the following information: Assets discovered at death (at fair value): Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....
-
On July 1, 2012, Ted, age 73 and single, sells his personal residence of the last 30 years for $365,000. Ted's basis in his residence is $35,000. The expenses associated with the sale of his home...
-
Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1985. He also acquired a rental house in 2012, which he actively manages. During 2012, Walter's share of the...
-
Jan has two jobs during 2012. One employer withheld and paid FICA taxes on $66,600 of Jan's salary, and the other employer withheld and paid FICA taxes on $44,400 in salary paid to Jan. Calculate the...
-
Schedule of Cost of Goods Sold Sydney Company reported the following amounts for October: Use Excel to prepare a schedule of cost of goods sold for October. Beginning raw materials inventory....
-
For each of the following unrelated companies, compute the cost of goods manufactured and the cost of goods sold: A B C Selling expenses Factory insurance. Ending finished goods inventory....
-
The following transactions occurred during January 2019 for Richards Manufacturing Company: Jan. 5 Acquired $4,500 of materials on account that will be used to produce product for resale. 11...
Study smarter with the SolutionInn App