Anthony Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2025, Anthony entered into a 3-year service contract with Sweet Acacia Tech. Sweet Acacia promises to pay $9,600 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,600. In addition, Sweet Acacia agrees to pay an additional $19,200 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.
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- On October 1, 2019, Grahams WeedFeed Inc. signs a contract to maintain the grounds for BigData Corp. The contract ends on March 31, 2020, and has a monthly payment of 3,200. The contract does not include any stipulations for additional periods. On June 1, Grahams WeedFeed and BigData sign a new 12-month contract that is retroactive to April 1, 2020. The monthly fee for the new contract is 4,000 per month and is also retroactive to April 1, 2020. During April and May of 2020, while the new contract was being negotiated, Grahams Weed Feed continued to maintain the grounds, and BigData continued to pay 3,200 per month. BigData was satisfied with Grahams WeedFeeds performance, and the only issue during negotiations was the monthly fee. Required: Determine if a valid contract exists between Grahams WeedFeed and BigData during April and May 2020.On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?Larkspur Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Larkspur entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,500 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,700. In addition, Walleye agrees to pay an additional $21,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. (a) Prepare the journal entries for Larkspur in 2020 and 2021 related to this service contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for…
- Oriole Financial Services performs bookkeeping and tax-reporting services to startup companies in the Hiawatha area. On January 1, 2025, Oriole entered into a 3-year service contract with Pharoah Tech. Pharoah promises to pay $21,600 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $19,400. In addition, Pharoah agrees to pay an additional $48,500 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. (a) Prepare the journal entries for Oriole in 2025 and 2026 related to this service contract. (List all debit entries before credit entries. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no…Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. (a) Prepare the journal entries for Coronado in 2020 and 2021 related to this service contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for…Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. (a) Prepare the jourmal entries for Coronado in 2020 and 2021 related to this service contract. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No entry" for…
- Tyler Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Tyler entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,000. In addition, Walleye agrees to pay an additional $20,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. Instructions a. Prepare the journal entries for Tyler in 2020 and 2021 related to this service contract. b. Prepare the journal entries for Tyler in 2022 related to the modified service contract, assuming a prospective approach. c. Repeat the…(Franchise Entries) Pacific Crossburgers Inc. charges an initial franchise fee of $70,000. Upon the signing of the agreement (which covers 3 years), a payment of $28,000 is due. Thereafter, three annual payments of $14,000 are required. The credit rating of the franchisee is such that it would have to pay interest at 10% to borrow money. The franchise agreement issigned on May 1, 2017, and the franchise commences operation on July 1, 2017.InstructionsPrepare the journal entries in 2017 for the franchisor under the following assumptions. (Round to the nearest dollar.)(a) No future services are required by the franchisor once the franchise starts operations.(b) The franchisor has substantial services to perform, once the franchise begins operations, to maintain the value of the franchise.(c) The total franchise fee includes training services (with a value of $2,400) for the period leading up to the franchise opening and for 2 months following opening.On July 1, 2022, John entered into a 12-month telecom plan with Cabinet Telecom. The terms of the plan includes the following: Calida's monthly fixed fee is P2,000. Calida receives a free handset at the inception of the plan.Tela Telecom sells the same handsets for P6,000 and the same monthly prepayment plans w/out handset for P1,600/month.Determine the total amount of revenue to be recognized by Cabinet Telecom in 2022
- (Contract Modification) Tyler Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2017, Tyler entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $10,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $8,000. In addition, Walleye agrees to pay an additional $20,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract.Instructions(a) Prepare the journal entries for Tyler in 2017 and 2018 related to this service contract.(b) Prepare the journal entries for Tyler in 2019 related to the modified service contract, assuming a prospective…Coronado Financial Services performs bookkeeping and tax-reporting services to startup companies in the Oconomowoc area. On January 1, 2020, Coronado entered into a 3-year service contract with Walleye Tech. Walleye promises to pay $9,000 at the beginning of each year, which at contract inception is the standalone selling price for these services. At the end of the second year, the contract is modified and the fee for the third year of services is reduced to $7,000. In addition, Walleye agrees to pay an additional $18,000 at the beginning of the third year to cover the contract for 3 additional years (i.e., 4 years remain after the modification). The extended contract services are similar to those provided in the first 2 years of the contract. (a) Your Answer Correct Answer Your answer is correct. Prepare the jourmal entries for Coronado in 2020 and 2021 related to this service contract. (Credit account titles are automatically indented when the amount is entered. Do not indent…TBTF Incorporated rents commercial real state to locally based businesses. TBTF purchased a large office complex on January 2, 2022. In exchange for the real estate, TBTF issued a noninterest bearing note to the seller. This note will be paid in equal instalments that include both principal and interest at the end of each calendar year. Other information pertaining to the purchase of the real estate follows: Annual instalment payment amount Market rate of borrowing for TBTF Number of years note will be outstanding Portion of the purchase price to be allocated to land Portion of the purchase price to be allocated to land improvements $ 253,134 8% 9 24% 14% TBTF has a year end date of December 31. Required: Prepare the journal entries required by TBTF to account for the note on each of the following dates: January 2, 2022 December 31, 2024