XYZ Pharmaceuticals entered into a licensing agreement with ABC Lab for a new COVID-19 Vaccine under development. XYZ will receive $6,750,000 if the new drug receives Ministry of Health approval. Based on prior approval, XYZ determines that it is 85% likely that the drug will gain approval. The transaction price of this arrangement should be Select one: O a. $1,012,500. O b. $6,750,000. O c. $5,737,500. O d. $0 until approval is received
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XYZ Pharmaceuticals entered into a licensing agreement with ABC Lab for a new COVID-19 Vaccine under development. XYZ will receive $6,750,000 if the new drug receives Ministry of Health approval. Based on prior approval, XYZ determines that it is 85% likely that the drug will gain approval. The transaction price of this arrangement should be Select one: O a. $1,012,500. O b. $6,750,000. O c. $5,737,500. O d. $0 until approval is received
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- Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial. Instructions a. Determine the transaction price of the arrangement for Blair Biotech. b. Assuming that regulatory approval was granted on December 20, 2020, and that Blair received the payment from Pang on January 15, 2021, prepare the journal entries for Blair. The license meets the criteria for point-in-time revenue recognition.(Determine Transaction Price) Blair Biotech enters into a licensing agreement with Pang Pharmaceutical for a drug under development. Blair will receive a payment of $10,000,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Blair determines it is 90% likely that the drug will gain approval and a 10% chance of denial.Instructions(a) Determine the transaction price of the arrangement for Blair Biotech.(b) Assuming that regulatory approval was granted on December 20, 2017, and that Blair received the payment from Pang on January 15, 2018, prepare the journal entries for Blair. The license meets the criteria for point-in-time revenue recognition.Crane Biotech enters into a licensing agreement with Windsor Pharmaceutical for a drug under development. Crane will receive a payment of $8,600,000 if the drug receives regulatory approval. Based on prior experience in the drug-approval process, Crane determines it is 85% likely that the drug will gain approval and a 15% chance of denial. (a) Determine the transaction price of the arrangement for Crane Biotech. Transaction price $ eTextbook and Media List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer (b) The parts of this question must be completed in order. This part will be available when you complete the part above.
- Entity Suppliers contracts with its customer to deliver an imaging device and 50 replacement cartridges to be used with the device. The contract price for the device is $100,000, and the cartridges, which are expected to be delivered over six months, are priced at $1,000 each. The stand-alone selling price for the device is $100,000, and the stand-alone selling price for each replacement cartridge is $1,250. The allocation of the transaction price based on the relative selling prices is as follows: Imaging device Cartridges Standalone selling price $100,000 62,500 $162,500 % of total 61,5% 38.5% 100% Allocation of the contract prices $92,250 57,750 $150,000 After Entity Suppliers has delivered the imaging device and 40 cartridges, the parties agree to modify the contract to increase the total number of cartridges. Required: For each of the following scenarios, determine if a separate contract is created by the modification and describe the accounting for revenue recognition. a. Entity…Zilong Company operates a customer loyalty program. The entity grants program members loyalty points when they spend a specified amount on purchases. Program members can redeem the points for further purchases. The points have no expiry date. During 2021 the entity granted 80,000 points. Management expects that 90% of these points will be redeemed. The fair value of each loyalty point is estimated at P20. The sales during 2021 amounted to P9,000,000 including loyalty points. On December 31, 2021, 28,800 points have been redeemed in exchange for purchases. In 2022 the management revised its expectations and expects 85% of the points to be redeemed altogether. During 2022, the entity redeemed 12,000 points. What is the revenue earned from loyalty points for the year ended December 31, 2021?Luke consulting enters into a contract with Holand University to restructure Holand's process for purchasing goods from suppliers. The contract states that Luke will earn a fixed fee of P25,000and earn an additional P10,000 if Holand achieves P10,000 of cost savings. Luke determines the transaction price as the expected value of expected consideration, what transsaction price will Luke estimate for this contract?
- Kaiser Exporters buys used medical equipment and sells it to various foreign health care institutions. On June 15, the company committed to sell medical equipment to a foreign hospital for 800,000 FC. The equipment, with a cost of $325,000, was shipped to the customer on August 15 with terms FOB shipping point and payment due on October 15. At the time of the commitment, Kaiser acquired a forward contract to sell 800,000 FC in 120 days. Selected spot and forward rates are as follows: June 15 June 30 August 15 September 30 Spot rate ...... Forward rate .... $0.500 0.510 $0.485 0.490 $0.480 0.475 $0.470 0.468 The relevant discount rate is 6% and changes in the value of the firm commitment are measured as changes in the forward rate over time. Assume that the hedge is accounted for as a fair value hedge and that the time value of the hedge is included in the assessment of effectiveness. Assuming that financial statements are prepared for the second and third quarters,…3. Erika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85% 2023 15,000 90% Required: Prepare journal entries from 2020 to 2023.Kaiser Exporters buys used medical equipment and sells it to various foreign health care institutions. On June 15, the company committed to sell medical equipment to a foreign hospital for 800,000 FC. The equipment, with a cost of $325,000, was shipped to the customer on August 15 with terms FOB shipping point and payment due on October 15. At the time of the commitment, Kaiser acquired a forward contract to sell 800,000 FC in 120 days. Selected spot and forward rates are as follows: June 15 Spot rate ........................... $0.500 Forward rate ........................ 0.510 June 30 Spot - $0.485 Forward - 0.490 August 15 Spot - $0.480 Forward - 0.475 September 30 Spot - $0.470 Forward - 0.468 June 15 Spot rate ........................... $0.500 Forward rate ........................ 0.510 June 30 Spot - $0.485 Forward - 0.490 August 15 Spot - $0.480 Forward - 0.475 September 30 Spot - $0.470 Forward - 0.468
- Bella Pool Company sells prefabricated pools that cost P100,000 to customers for P180,000. The sales price includes an installation fee, which is valued at P25,000. The fair value of the pool is P160,000. The installation is considered a separate performance obligation and is expected to take 3months to complete. The transaction price is allocated to the pool and the installation is:a. P155,676 and P24,324 respectivelyb. P160,000 and P25,000 respectively Show complete solutionErika Company operates a customer loyalty program. The entity grants loyalty points for goods purchased. The loyalty points can be used by the customers in exchange for goods of the entity. The points have no expiry date. During 2020, the entity issued 50,000 award credits and expects that 80% of these award credits shall be redeemed. The stand-alone selling price of the award credits granted is reliably measured at P1,000,000. In 2020, the entity sold goods to customers for a total consideration of P7,000,000 based on stand-alone selling price. The award credits redeemed and the total award credits expected to be redeemed each year are as follows: Redeemed Expected to be Redeemed 2020 15,000 80% 2021 7,950 85% 2022 2,550 85%…Inventors sells two of its patents in a contract with a retailer that sells toys and other children's products. The first is a patent for a super absorbent diaper and the second is a patent for a new digital toy. Palm determines that each of these patents comprises a separate performance obligation. The estimated standalone selling prices are $7 million for the diaper patent and $2 million for the digital toy patent. The stated price in the contract for the diaper patent is a fixed payment of $3.3 million. The price stated for the digital toy patent is 10% of the customer's future sales of the toys. Palm estimates the variable consideration for this patent as $3.7 million. During the current year, the customer has sales related to the toy patent of $20.0 million, resulting in a $2 million payment to Palm inventors and a total consideration of $5.3 million. What amount of the transaction price should Palm allocate to each performance obligation? Patent Standalone…