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After two years of developing a prototype collaborative hub and at the beginning of the financial year, Large Mart intends to sell the device to its commercial customers directly through its Albury store. However, on the day the devices go on sale, Large Mart receives an offer from the Australian Military to purchase 100 collaborative hubs for $500,000. Large Mart accepts the offer and manufactures the 100 collaborative hubs at a production cost of $3,000 per collaborative hub. (IMPORTANT NOTE: the cost of $3,000 per collaborative hub does NOT include any research or development expenditure!). On the day the collaborative hubs are delivered to the Australian Military, Large Mart receives the $500,000 payment for the collaborative hubs. However, the Large Mart accounting department is unsure how to calculate the Cost of Goods Sold for this sales transaction

Question 1 A) Explain how Large Mart will need to calculate the Cost of Goods Sold for the sale of the collaborative hubs to the Australian Military (IMPORTANT NOTE: You do NOT need to show the calculations for the Cost of Goods Sold!)

The Australian Military is also considering purchasing all rights to the manufacture of the collaborative hub that was developed by Large Mart as a matter of national security and for its own exclusive use.

Question 1 B) Explain how the Large Mart accounting department would have to record such a sale of all rights to the manufacture of the collaborative hub to the Australian Military and highlight any differences (if any exist) between this sale of all rights to the manufacture of the collaborative hub and the sale of 100 individual collaborative hubs to the Australian Military. (IMPORTANT NOTE: you do NOT need to show any journal entries or calculations in your answer to this question)

Answer rating: 100% (QA)

A Question 1 A The Large Mart accounting department would need to calculate the Cost of Goods Sold f... View the full answer