Question: Entity A sells a machine to Entity B on 1 May 2022 for a total price of $6,540,000, which incorporates both the sale of the

Entity A sells a machine to Entity B on 1 May 2022 for a total price of $6,540,000, which incorporates both the sale of the machine and supporting service. Due to the specialized nature of the machine, at the inception of the contract, Entity A has agreed to provide a supporting service for the next three years?

The annual cost to Entity A of providing this service will be $60,000. Entity A usually earns a gross profit margin of 20% on such contracts?

REQUIRED:

1) Evaluate the revenue in Entity A's Statement of Profit or Loss for the year ended 30 September 2022?

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