1.

If the promise to grant license is distinct and that the license provides the customer the “right to
use” the entity’s intellectual property, how is revenue recognized from the initial fee in the
contract?
- in full when the customer obtains control of the license
2. When should a consignor recognize revenue from a consignment sale?
- When the consignee sells the goods to the end customer

3. Entity consigns goods to Entity B. Normally, end customers buy over-the-counter from Entity B.
However, in some cases, Entity B ships the goods to customer. Entity B deducts the shipping cost
from the amount remitted to Entity A. How should Entity A account for the shipping cost?
- Freight out

4. On January 1, 20x1, an entity grants a franchisee the right to operate a restaurant in a specific
market using the entity’s brand name, concept and menu for a period of ten years. The entity has
granted others similar rights to operate this restaurant concept in other markets. The entity
commonly conducts national advertising campaigns, promoting the brand name, and restaurant
concept generally. The franchisee will also purchase kitchen equipment from the entity. The
entity will receive ₱950,000 upfront (₱50,000 for the kitchen equipment and ₱900,000 for the
franchise right) plus a royalty, paid quarterly, based on 4% of the franchisee’s sales over the life
of the contract. The ₱50,000 amount reflects the stand-alone selling price of the kitchen
equipment. The entity delivers the kitchen equipment to the customer on February 1, 20x1. The
customer commences business operations on April 1, 20x1 and reports total sales of ₱5,000,000
for the year. How much total revenue should the entity recognize from the contract in 20x1?
- 317500

5. Under the “cost-to-cost” method, the percentage of completion may be computed as

- Total costs incurred to date divided by the sum of Total costs incurred to date and
Estimated costs to complete

6. S1: If another party is primarily responsible for fulfilling a contract with a customer, this may not
indicate that the entity is an agent. S2: Under a consignment arrangement, the consignor
recognizes revenue equal to the gross sales price.
- Both statements are correct
7. Which of the following statements is correct?
- PFRS 15 does not provide a special distinction between long-term construction
contracts from other types of contracts with customers. Therefore, an entity shall apply
the same principles in accounting for long-term construction contracts as those applied
to other types of contracts with customers.

8. I and II
9. 10200

10. On Jan. 1, 20x1, Hurt Co. entered into a franchise agreement with Hero Co. The franchise
contract gives Hero Co. the right to use Hurt’s trademark and proprietary processes for a period
of 4 years. The franchise requires payment of an upfront fee of ₱1,000,000, payable at contract
inception, and 5% monthly royalty based on sales. Aside from the granting of the license, the
franchise agreement also requires Hurt Co. to undertake pre-opening activities to setup the
contract and post-commencement activities, such as research and development and marketing
campaigns, to support the intellectual property. Although the activities do not result in the direct
transfer of a good or service to Hero Co. as the activities occur, it is expected that Hero Co. will
benefit from them. All the necessary preparations were completed and Hero Co. started business
operations on January 31, 20x1. Hero had total sales of ₱9,000,000 in 20x1. How much revenue
would Hurt Co. recognize in 20x1?
- 679167

11. Which of the following indicates that an entity is acting as an agent rather than principal?
- The entity does not have inventory risk.

12. An entity is developing a multi-unit residential complex. A customer enters into a binding sales
contract with the entity for a specified unit that is under construction. Each unit has a similar floor
plan and is of a similar size, but other attributes of the units are different (for example, the
 location of the unit within the complex). The customer pays a deposit upon entering into the
contract and the deposit is refundable only if the entity fails to complete construction of the unit
in accordance with the contract. The remainder of the contract price is payable on completion of
the contract when the customer obtains physical possession of the unit. If the customer defaults
on the contract before completion of the unit, the entity only has the right to retain the deposit.
Which of the following statements is correct?
- The entity’s performance obligation is satisfied at a point in time because the entity does
not have an enforceable right to payment for performance completed to date.

13. 176500

14. On January 1, 20x1, Pongcuter Co. enters into a contract with a customer to grant a software
license for ₱1,000,000. The fee is payable at contract inception. The license has a term of four
years, to reckon from the date the customer can use the software. The customer can determine
how and when to use the right without further performance by Pongcuter Co. and does not expect
that Pongcuter Co. will undertake any activities that significantly affect the intellectual property
to which the customer has rights. The software is transferred to the customer on February 1, 20x1.
However, the code, which is necessary for the customer to use the software, is transferred only on
April 1, 20x1. How should Pongcuter Co. recognize revenue from the fixed consideration in the
contract?
- in full on April 1, 20x1

15. According to PFRS 15, if the nature of the entity’s promise to grant franchise rights in a franchise
agreement is to provide the franchisee the right to use the entity’s intellectual property as it exists
at the point in time at which the license is granted, the initial franchise fee is recognized as
revenue
- at the point in time when the rights are transferred to the franchisee and the franchisee
obtains the ability to use those rights
16. 0

17.
Which of the following statements is incorrect if an entity’s promise to grant a license is not distinct
and that the performance obligation is satisfied at a point in time?
- Recognize the sales-based (or usage-based) consideration in the contract in full when the
license is effectively transferred to the customer.

18. 40600

19. Which of the following does not indicate that the nature of an entity’s promise to transfer a
license is to provide the customer the right to access the entity’s intellectual property as it exists
throughout the license period?
- The customer can direct the use of, and obtain substantially all of the remaining
benefits from, the license at the point in time at which the license is granted.
20. In accounting for sales on consignment, sales revenue and the related cost of goods sold should
be recognized by the
- Consignor when notification is received that the consignee has sold the goods.

21. In September 20x1, DEF Co. consigned 3,200 books costing ₱60 and retailing for ₱100 each to
GHI Co., debiting Accounts Receivable and crediting Sales for the retail sales price. Freight cost
of ₱3,200 was debited to Freight Expenses by the consignor. On September 30, 20x1, DEF Co.
received from GHI Co. the amount of ₱142,020 in full settlement of the balance due, and
Accounts Receivable was credited for this amount. The consignor deducted a commission of ₱20
for each book sold, a total of ₱180 for delivery expenses and a total of ₱200 for advertising
expense. How many books were actually sold by GHI Co.?
- 1780

22. 472000

23. How much is the net profit (loss) recognized in 20x2?

(372000)
24. According to PFRS 15, how does an entity account for a promise in the contract to transfer a
good or service that is not distinct?
- The entity shall combine the non-distinct good or service with the other promises in the
contract and treat the combined promises as a single performance obligation.