Shaw Company sells goods that cost $300,000 to Ricard Company for $400,000 on January 2, 2020. The sales price includes an installation fee, which is valued at $40,000. The fair value of the goods is $370,000. The goods were delivered on March 1, 2020.Installation is considered a separate performance obligation and was completed on June 18, 2020. Under the terms of the contract, Ricard Company pays Shaw $270,000 upon delivery of the goods and the balance at the completion of the installation.

Instructions

a. Using the five-step process for revenue recognition, determine when and how much revenue would be recognized by Shaw. Round percentage allocations to two decimal places and final amounts to the nearest dollar. Assume IFRS is followed.

b. Prepare the journal entries for Shaw on January 2, March 1, and June 18, 2020.