AZ industries makes and sells a high end dish washing machine.  AZ clean offers its Platinum model, for a price of $900.  The price includes the washing machine, installation by the manufacturer, and a 5 year extended warranty. The washing machine can be purchased for $800, but the customer would need to install it themselves or find an installer to do it for them.  AZ states that if they do not perform the installation any warranty they offer is null and void, as improper installation can cause the dishwasher to fail through no fault of the manufacturer.    Private plumbers can install the turbo clean machine at a cost of $100, and a home warranty company can provide a 5 year warranty at a cost of $200. AZ needs to know how to recognize revenue for the sale of one unit with their installation and warranty for $900 on January 1, 2020.

a. Provide the numerical reference to the appropriate part of the Accounting Standards Codification (ASC) that describes the 5 step revenue recognition process recently implemented by the FASB?  Copy and paste the 5 step process found in the codification.

b. How does the codification define a “Performance obligation,” provide appropriate numerical reference for your answer.

c. Using the relevant guidance form the codification, identify:

1. The performance obligation or obligations that may be present in the contract, explain why each obligation you identify should be a separate performance obligation.
   1. What journal entries would AZ industries record for this sale in the year 2021 and 2020.

Answer rating: 100% (QA)

Answer a As per ASC 606 the fivestep revenue recognition process implemented by FASB is mentioned be... View the full answer