X Ltd. has entered into an agreement with its selling agent Y, in accordance with which...
X Ltd. has entered into an agreement with its selling agent Y, in accordance with which X Ltd. has to pay a base percentage of commission on export sales and an additional commission is to be paid if the export incentives are received. As per the accounting policy of X Ltd., it recognises export incentives when actually realised, on account of the uncertainty in realising such incentives. Export incentives have not been received for the year 20X1-20X2, however X Ltd. is hopeful of receiving the export incentives in the year In the financial statements for 20X1-20X2, should X Ltd. provide for both base commission and additional commission? (Study Material) Answer: So far as the base percentage of sales commission is concerned, it is a present Obligation arising out of past events. The obligating event takes place when the sales are made and also since commission is based on percentage of sale, reliable estimation Can also be made. Therefore, the base percentage of sales commission should be provided. However, in respect of additional commission, it is to be paid when the export incentives are recognised and export incentives are recognised only when it is received. Therefore, the Obligating event will arise only when export incentives are received. Hence. no provision for additional commission is to be made in financial year 20X1-20X2. The expectation of X Ltd. to receive the export incentives in next year would not make any difference as on 31 March 20X2
Homework Answers
So far as the base percentage of sales commission is concerned, it is a present Obligation arising out of past events. The obligating event takes place when the sales are made and also since commission is based on percentage of sale, reliable estimation Can also be made. Therefore, the base percentage of sales commission should be provided. However, in respect of additional commission, it is to be paid when the export incentives are recognised and export incentives are recognised only when it is received. Therefore, the Obligating event will arise only when export incentives are received. Hence. no provision for additional commission is to be made in financial year 20X1-20X2. The expectation of X Ltd. to receive the export incentives in next year would not make any difference as on 31 March 20X2
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X Ltd. has entered into an agreement with its selling
agent Y, in accordance with which...
SPU, Ltd., has just received its sales expense report for January, which follows. Item Sales commissions...
SPU, Ltd., has just received its sales expense report for January, which follows. Item Sales commissions Sales staff salaries Telephone and mailing Building lease payment Utilities Packaging and delivery Depreciation Marketing consultants Amount $364,500 86,400 43,000 54,000 11,100 74.000 33,750 53,190 You have been asked to develop budgeted costs for the coming year. Because this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover the following additional data:...
SPU, Ltd., has just received its sales expense report for January, which follows Amount $390,500 86,400...
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Question 3 Tiger is a cleaning and packaging supplies company. It started its business on 1 July 2015. The income statement for the year ended 30 June 2019 and the extract of the statements of financial position of Tiger Ltd for the year ended 30 June 2019 and 30 June 2020 are provided below. The income statement reports a profit before tax of $1,174,955 for the year ended 30 June 2020. 1,635,900 The Income Statement for the year...
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SPU, Ltd., has just received its sales expense report for January, which follows Amount $390,500 86,400 Item Sales commissions 2.5 points Sales staff salaries Telephone and mailing Building lease payment 45,000 70,000 20,100 78,000 40,750 55,190 Skipped Utilities Packaging and delivery Depreciation Marketing consultants eBook You have been asked to develop budgeted costs for the coming year. Because this month is typical, you decide to prepare an estimated budget for a typical month in the coming year and you uncover...
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ques 3
Question 3 Tiger is a cleaning and packaging supplies company. It started its business on 1 July 2015. The income statement for the year ended 30 June 2019 and the extract of the statements of financial position of Tiger Ltd for the year ended 30 June 2019 and 30 June 2020 are provided below. The income statement reports a profit before tax of $1,174,955 for the year ended 30 June 2020. 1,635,900 The Income Statement for the year...
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