Reference no: EM132950360

Questions -

Q1. Jack Company operates two major lines of business namely, candle manufacturing and clothing retailing. On December 31, 2015, in response to an unsolicited offer, Jack disposed of its candle-making operation for P 1,000,000 when the carrying amount of the operation's assets were- factory building, P 400,000; machinery, P 300,000 and trademark, P 200,000. The candle-making operation has no other assets and has no liability, but as a result of the disposal the company has an income tax payable of P 20,000 related to the gain on disposal. The candle-making has a profit after tax of P 150,000 for the year ended December 31, 2015. In the statement of comprehensive income, what single amount should Jack disclose related to the discontinued operation?

a. 0 c. 150,000

b. 100,000 d. 230,000

Q2. Che Company, a grocery retailer operates a customer loyalty programme. It grants programme members loyalty point when they spend a specified amount on groceries. Programme members can redeem the points for further groceries. The points have no expiry date. During the year 2016, the entity grants 100,000 points but management expects that only 80,000 points will be redeemed. The management of Che estimates the fair value of each loyalty point to be P 1 and defers revenue in the amount of P 100,000. During the year 2016, the company had redeemed 40,000 points. In 2017 additional 100,000 loyalty points were issued but the company expects not to redeem 20%. The related liability on the 2017 loyalty points is P 150,000. During 2017, 30,000 and 60,000 points from 2016 and 2017 were redeemed. What amount of revenue from loyalty programme should Che recognize for the year ended December 31, 2017?

a. 12,500 c. 112,500

b. 37,500 d. 150,000