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