3 7 While there equipment is considered reliable, experience dictates that the following level of epairs...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
3 7 While there equipment is considered reliable, experience dictates that the following level of epairs will likely be for the period of the warranty, and a discount rate of 10% is appropriate. This should be recognised at the date of sale. 1 2 Vermelen needs some equipment for their Post COVID 19 tour from Erasmus Amplification Ltd. Erasmus Amplification Ltd agrees to manufacture the equipment which has a price of $6,000,000 and cost $3,500,000 to manufacture. Erasmus Amplification provides a 5 year warranty for the equipment. The equipment is delivered on 1 July 2021. Year Value 60,000 48,000 36,000 24,000 2 4 By 30 June 2021 the equipment has been found to be much more reliable than expected and no repairs have been necessary to date. The following is now the best estimate of warranty costs Year 1 3 5 Total NPV @10% 145,106 24,000 12,000 180,000 5 Total NPV Value 42,000 30,000 18,000 6,000 96,000 4 5 18,000 6,000 Total 96,000 NPV @8% 83,308 Required 1. Provide any journal entries for the provision on 1 July 2020 2. Provide any ournal entries for the provision on 30 June 2021 3 7 While there equipment is considered reliable, experience dictates that the following level of epairs will likely be for the period of the warranty, and a discount rate of 10% is appropriate. This should be recognised at the date of sale. 1 2 Vermelen needs some equipment for their Post COVID 19 tour from Erasmus Amplification Ltd. Erasmus Amplification Ltd agrees to manufacture the equipment which has a price of $6,000,000 and cost $3,500,000 to manufacture. Erasmus Amplification provides a 5 year warranty for the equipment. The equipment is delivered on 1 July 2021. Year Value 60,000 48,000 36,000 24,000 2 4 By 30 June 2021 the equipment has been found to be much more reliable than expected and no repairs have been necessary to date. The following is now the best estimate of warranty costs Year 1 3 5 Total NPV @10% 145,106 24,000 12,000 180,000 5 Total NPV Value 42,000 30,000 18,000 6,000 96,000 4 5 18,000 6,000 Total 96,000 NPV @8% 83,308 Required 1. Provide any journal entries for the provision on 1 July 2020 2. Provide any ournal entries for the provision on 30 June 2021
Expert Answer:
Answer rating: 100% (QA)
ANSWER Journal Entries for Provision on 1 July 2020 Account Debit Credit Equipme... View the full answer
Related Book For
Auditing A Risk Based Approach to Conducting a Quality Audit
ISBN: 978-1305080577
10th edition
Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg
Posted Date:
Students also viewed these accounting questions
-
3. Astral Poly Technik had fixed 19 March 2021 as record date for of ascertaining the eligibility of shareholders entitled for issuance of Bonus Equity Shares in the proportion of 1 (One) Equity...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
A study of Machiavellian traits in accountants was published in Behavioral Research in Accounting (January 2008). Recall that Machiavellian describes negative character traits such as manipulation,...
-
Investments in Stock Atlas Superstores occasionally finds itself with excess cash to invest and consequently entered into the following transactions during 2010: Jan. 15: Purchased 200 shares of...
-
Evaluate the sum that exists. 1)- i=1
-
In what ways can ICT help a country achieve a comparative advantage?
-
Amos Excavating Inc. is purchasing a bulldozer. The equipment has a price of $100,000. The manufacturer has offered a payment plan that would allow Amos to make 10 equal annual payments of $15,582,...
-
Use the following data to calculate the requested ratios for Accra Starlite Enterprises. Briefly analyse each answer. Assets R'000 Liabilities and Equity R'000 Cash 380 Accounts payable Accounts...
-
It is now Prime Day, the deal is selling well, but you just got a call from the vendor explaining that they will not be able to fill any more units for the next 3 weeks. Your Instock Manager (Anjali...
-
Jenny has no assets, but she has $1,000 to invest in one of two stocks. Stock A has a beta of 1.2 and a sigma of 0.2. Stock B has a beta of 1.0 and a sigma of 0.3. If the market prices the stocks...
-
Which phase of meiosis is depicted in the drawing below? a. Metaphase of meiosis I b. Metaphase of meiosis II c. Anaphase of meiosis I d. Anaphase of meiosis II B W
-
Write a function print depth first in a binary tree without using system stack you may want to keep another element to tree node like visited flag.
-
For a given time series of sales, the training set consists of 50 months. The first five months data are shown below: a. Compute the sales forecast for January 1999 based on a moving average with w =...
-
Suppose there are \(n\) firms selling a homogeneous product at a constant marginal cost, \(m=5\), in a Cournot market. The inverse market demand curve is \(p=20-Q\), where \(Q=n q\). What is the...
-
The preclosing trial balance for the Pension Trust Fund of Almen County at December 31, 20X8, is presented here. Prepare the Statement of Plan Net Assets at December 31, 20X8, and the Statement of...
-
While many jobs were lost or put on hold during 2020, 2021 ushered in an era of workers leaving their jobs. We read news articles about restaurants closing and service employees in many industries...
-
Use multiplication or division of power series to find the first three nonzero terms in the Maclaurin series for each function. y = e x2 cos x
-
Refer to the Focus on Fraud feature "The Parmalat Fraud and Its Many Victims." Use appropriate resources to answer the following questions. a. Which two audit firms did Parmalat sue after the...
-
Refer to the Standards Appendix at the end of this text. Identify the relevant auditing standards (PCAOB, AICPA, and IAASB) concerning using analytical procedures as a substantive test. Locate the...
-
What is a false confirmation? Why are false confirmations so problematic for auditors in terms of evidence reliability expectations?
-
(a) Generate 10,000 random variables following the beta \((5,5)\), the beta \((0.8,0.8)\), the beta \((0.8,5)\), the beta \((5,2)\), the beta \((2,5)\), and the beta( \(5,0.8)\) distributions. Fit...
-
(a) Plot on the same set of axes, using different line types and/or different colors, the PDFs of a standard normal distribution, a \(t\) with 10 degrees of freedom, a \(t\) with 2 degrees of...
-
(a) Consider a normal distribution with mean 100 and variance 100. Write out the CDF of the threshold exceedance distribution with respect to 120 (two standard deviations above the mean). Just use...
Study smarter with the SolutionInn App