ITS Which statement is incorrect? UN A. A contract that transfers only an insignificant insurance risk is not an insurance contract. B. Product warranties issued directly by a manufacturer is an insurance contract but is accounted for under PFRS 15, not PFRS 17. C. Instead of PFRS 17, the standard applicable to contracts that principally transfer financial risk, such as credit derivative, will be PFRS 9. D. When a property is insured with different insurers against the same risk and the total insurance policy exceeds the value of the property, the policy holder can recover more than the amount of actual loss to be incurred if the insured event happens. E. none of the above dent Handbook: Code of Ethics- 24. Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- warning with invalidation of grade; 2nd violation, censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade CMPC 131A P100000 franchise involves one performance obligation to be performed over a period of 5 years. If the franchisor incurred P20,000 direct labor cost as the start of the contract to satisfy the performance obligation, which of the following statements is FALSE? [A] The franchisor will initialty recognize P20,000 contract asset [B] The franchisor will initially recognize P100000 contract liability. [C] The franchisor will report P32,000 gross profit for the second year. [D] The franchisor will report P20,000 contract liability at the end of the fourth year. \fOn Jan. 1, 2020, ABC Franchisor and XYZ Franchisee signed a franchise contract over the use of ABC's logos and brand in the latter's T-shirt shop. The contract requires P400,000 cash as payment from the franchisee. ABC will give the right to use its intellectual property to XYZ from April 1, 2020 to Mar. 31, 2025. If the contract is cancelled within 30 days from signing, 70% of the cash payment may be refunded. If cancelled on the 31st day and until the day before grant date, 10% can be refunded. ABC and XYZ both expect that ABC will exert effort over its marketing campaign and continue to grow its brand in the next 5 or more years. What is the compound journal entry on Dec. 31, 2020 if the contract is cancelled? [A] DR: Contract Liability - 400,000 CR: Franchise Revenue - 400,000 [B] DR: Contract Liability 2400,000 of Ethics- 24. Cheating CR: Gain on Contract Cancellation - 400,000 [C] DR: Contract Liability - 400,000 he: 1st violation- Blation, censure to suspension CR: Franchise Revenue + 80,00Vension to dismiss CR:Gain on Contract Cancellation - 320,000 [D] DR: Contract Liability - 400,000 CR: Franchise Revenue - 60,000 C CR: Gain on Contract Cancellation - 340,000QUIS UN On December 1, 2021, ABC Department Store received 505 sweaters on consignment from Todd. Todd's cost for the sweaters was P80 each, and they were priced to sell at P100. ABC's commission on consigned goods is 10%. At December 31, 2021, 5 sweaters remained. In its December 31, 2021 is 10%. At December 31, 2021, 5 sweaters remained. In its December 31, 2021 balanced sheet, what amount should ABC report as payable for consigned goods? [A] 49,000 ICAT [B] 45,400 [C] 45,000 IENTIA EDIFIC [D] 40,400 1911 Reminder from the Student Handbook: Code of Ethics- 24. Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- warning with invalidation of grade; 2nd violation, censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade CMPC 131On December 1, 20x4, ABC Co enters into a contract to deliver 10 cars to XYZ company which is to be used by XYZ for their business. The contract specifically states the XYZ can at any time cancel the contract and return the cars they already received from ABC if ABC has not yet delivered at least 6 cars. The cost of 1 vehicle is P800,000 which ABC sells for P1,000,000. ABC was able to deliver 4 cars in 20x4 and the remaining 6 cars in 20x5. How much revenue is to be recognized by ABC in 20x5? + ICAT [A] 6,800,000 [B] 6,000,000 EDIFIC [C] 2,000,000 ENTIA [D] 1,200,000 1911 Reminder from the Student Handbook: Code of Ethics- 24. Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- warning with invalidation of grade; 2nd violation, censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade CMPC 131Which of the following would not create the satisfaction of a performance obligation? [A] A car dealer sold a vehicle to his client on account, the car is already in the possession of the client but the title of the car is not yet in the name of the client. [B] A seller has delivered goods specied under a contractual agreement with the client. The goods are currently in transit with delivery terms FOB Shipping Point. [O] A contractor has already nished 90% of a contract entered into to specically build a house- The customer conrms that 90% is a reasonable estimate for the work already completed. [D] A real estate developer has recently transferred the title of a parcel of land they are developing under contract to one of their customers. The customer was still not able to physically receive the title of the land as he is currently abroad. IS ABC Co. enters into a contract to build an apartment for DEF Co. for a fixed fee of P20,000,000. At contract inception, ABC assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. ABC determines that the measure of progress that best depicts its performance in the contract is input method based on costs incurred. ABC estimates that the total contract costs would amount to P16,000,000 over the construction period. ABC incurs contract costs of P2,000,000 during the year. How much revenue is recognized for the year? [A] 2,000,000 [B] 2,500,000 ENTIA EDIE [C] 4,000,000 1911 eminder from the Student Handbook: Code of Ethics- 24. [D] 0 heating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- warning with invalidation of grade; 2nd violation, censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade CMPC 131Which statement is incorrect? In a contract of insurance, A.the issuer has the obligation to compensate the policyholder if the insured event happens. B.the policyholder regularly pays premium as consideration for the signicant insurance risk transferred to the issuer. C. the insured event is any an uncertain future event that is covered by the contract which creates the insurance risk. D.in case the insured event happens, the policyholder or his beneciary should le an insurance claim to receive the compensation from the issuer. E. none of the above An entity, a contractor, enters into a contract to build a hospital for a customer- The entity is responsible for the overall management of the project and identies various goods and services to be provided, including engineering, site clearance, foundation, procurement, construction of the structure, piping and wiring, installation of equipment and finishing. Which of the following statements is most likely to be correct? [A] The entity shall treat the promised goods and services as separate performance obligations- [B] The entity shall treat the promised goods and services as a single performance obligation because they are not separately identiable from each other. [C] The entity shall account for the contract using percentage of completion because the contract is a long-term construction contract. [D] The entity recognizes revenue as each promised good or service is transferred to the customer- QUIS UNI [S1] The insurer of an insurance contract and the insurer of a reinsurance contract can use either the General model or Premium Allocation Approach in accounting for their respective contracts. [S2] The initial measurement of a profitable insurance contract shall be zero. [A] both are true [B] both are false [C] S1 is true [D] S2 is true + IENTIA EDIFICE 1911 Reminder from the Student Handbook: Code of Ethics- 24. Cheating during examinations, quizzes or plagiarism in connection with any academic work, abetting of the same: 1st violation- warning with invalidation of grade; 2nd violation, censure to suspension with invalidation of grade; 3rd violation- suspension to dismissal/ non-readmission with invalidation of grade CMPC 131