Imagine yourself as the accountant of Chong Berhad. Your managing director has approached you regarding some issues about contract.

His doubt included:- (i) A modification to existing contract should be treated as a separate contact. (ii) If the agreed date of payment by a customer is later than the date on which services are transferred to that customer, part of the consideration should be treated as interest and not revenue. (iii) If a contract with customer provided warranty after service, the warranty represents a separate performance obligation, thus part of transaction price should be allocated for warranty.

Required:- In accordance with Malaysian Financial Reporting Standards (MFRS) 15 Revenue from Contracts with Customers, discuss the above issues. [8 marks]

Kronecker Company, a growing mail-order clothing and accessory company, is concerned about its growing MSDA expenses. It, therefore, examined its customer ordering patterns for the past year and identified four types of customers, as illustrated in the following table. Kronecker sends catalogs and flyers to all its customers several times a year. Orders are taken by mail or over the phone. Kronecker maintains a toll-free number for customers to use when placing orders over the phone. Kronecker prides itself on the personal attention it provides shoppers who order over the phone. All purchases are paid for by check or credit card. Kronecker has a very generous return policy if customers are not satisfied with the merchandise received. Customers must pay return shipping charges, but their purchase price is then fully refunded.

Prices are set so that cost of goods sold averages about 75% of the sales price. Customers pay actual shipping charges, but extra processing is required for overnight deliveries. Kronecker has developed the following activity cost driver rates for its support costs:

(a) Using ABC, determine the yearly profit associated with each of the four customers described.

(b) Comment on which customers are most profitable and why.

(c) What advice do you have for Kronecker regarding managing customer relationships with the different types of customers represented?

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office

furniture distributors. The company has a simple ABC system that it uses for internal decision making. The

company has two overhead departments whose costs are listed on the following page:

Manufacturing overhead .................................. $500,000

Selling and administrative overhead ................ 300,000

Total overhead costs ........................................ $800,000

The company’s ABC system has the following activity cost pools and activity measures:

Activity Cost Pool Activity Measure

Assembling units ..................... Number of units

Processing orders .................... Number of orders

Supporting customers ............. Number of customers

Other ........................................ Not applicable

Costs assigned to the “Other” activity cost pool have no activity measure; they consist of the costs of

unused capacity and organization-sustaining costs—neither of which are assigned to orders, customers, or

the product.

Ferris Corporation distributes the costs of manufacturing overhead and of selling and administrative

overhead to the activity cost pools based on employee interviews, the results of which are reported below:

Question 1

1. Perform the first-stage allocation of overhead costs to the activity cost pools and find manufacturing overhead for Assembling units.

Question 2

Compute activity rates for the activity cost pools and find the activity rate for processing orders

Question 3

Compute activity rates for the activity cost pools and find the activity rate for supporting customers

Question 4

Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Assembeling unit?

Question 5

Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Processing orders?

Ferris Corporation makes a single product—a fire-resistant commercial filing cabinet—that it sells to office

furniture distributors. The company has a simple ABC system that it uses for internal decision making. The

company has two overhead departments whose costs are listed on the following page:

Manufacturing overhead .................................. $500,000

Selling and administrative overhead ................ 300,000

Total overhead costs ........................................ $800,000

The company’s ABC system has the following activity cost pools and activity measures:

Activity Cost Pool Activity Measure

Assembling units ..................... Number of units

Processing orders .................... Number of orders

Supporting customers ............. Number of customers

Other ........................................ Not applicable

Costs assigned to the “Other” activity cost pool have no activity measure; they consist of the costs of

unused capacity and organization-sustaining costs—neither of which are assigned to orders, customers, or

the product.

Ferris Corporation distributes the costs of manufacturing overhead and of selling and administrative

overhead to the activity cost pools based on employee interviews, the results of which are reported below:

Required:

1- Perform the first-stage allocation of overhead costs to the activity cost pools and find manufacturing overhead for Assembling units.

2-Compute activity rates for the activity cost pools and find the activity rate for processing orders

3-Compute activity rates for the activity cost pools and find the activity rate for supporting customers

4-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Assembeling unit?

5-Office Mart is one of Ferris Corporation’s customers. Last year, Office Mart ordered filing cabinets four different times. Office Mart ordered a total of 80 filing cabinets during the year. What is the ABC cost for Processing orders?

The following table shows a company's annual revenue (in billions of dollars) for 2009 to 2014.

a)

What type of pattern exists in the data?

The time series plot shows an upward curvilinear trend.

The time series plot shows a downward curvilinear trend.     

The time series plot shows a downward linear trend.

The time series plot shows an upward linear trend.

(b)

Develop a linear trend equation for this time series to forecast revenue (in billions of dollars). (Round your numerical values to three decimal places.)

T_t = ____

(c)

What is the average revenue increase per year (in billions of dollars) that this company has been realizing? (Round your answer to three decimal places.)

$ ____ billion

(d)

Compute an estimate of this company's revenue (in billions of dollars) for 2015. (Round your answer to two decimal places.)

$ ____ billion

2.Amortizing a discount on along−termbond investment will​cause:

A.the interest revenue reported on the income statement to equal the cash received by the investor

B.the cash received by the investor to exceed the interest revenue reported on the income statement

C.the interest revenue reported on the income statement to exceed the cash received by the investor

D.the interest revenue reported is not related to the cash received by the investor

3.When a premium on a bond investment is amortized by the company holding the​ investment:

A.the amount of cash received as an interest payment will be increased

B.the amount of cash received as an interest payment will be reduced

C.Interest Revenue will be debited

D.companies normally credit a separate account called Premium on Investments

4.When a parent acquires​ 100% of the voting stock of a​subsidiary, that​ subsidiary:

A.automatically becomes part of one large legal entity that consists of the parent and the subsidiary together

B.ceases to exist as a separate legal​ entity, but it is still accounted for as a separate accounting entity

C.lives on as a separate legal entity

D.continues to exist as an accounting​ entity, but it ceases to exist in any legal form

According to the Pew Research center, how did the economic downturn affect different racial groups from 2005 to 2009 in the USA? Also, did the economic downturn affect the overall disparity between rich and poor?

In the real world of business, not all customers pay the balance they owe from purchases they made on account. Some customers' accounts receivable become uncollectible and must be written off by the company. Explain the two methods of accounting for uncollectible accounts. Which method is required by GAAP? Explain why.

Randal company has the following inventory transactions for the month of April:

Purchases: Units Cost Sales: Units

April 1 (beg. balance) 600 $6.00 April 3 500

4 1,500 $6.08 9 1,400

8 800 $6.40 11 600

13 1,200 $6.50 23 1,200

21 700 $6.60 27 900

29 500 $6.79

Instructions:

1) Assume Randal Company uses periodic inventory records. Determine the value of ending inventory using:

a) FIFO

b) LIFO

c) Average-cost

2) Assume Randa lComapny uses perpetual inventory records. Determine the value of ending inventory using:

a) FIFO

b) LIFO

3) Calculate cost of goods sold assuming the company uses periodic inventory procedures and inventory is priced using FIFO.

4) During an inflationary time period, which inventory method (FIFO, LFIO, or weighted average) will result in the highest net income? Why?