Question: Entity A sells a machine to Entity B on 1 September 2021 for a total price of $4,000,000, which incorporates both the sale of the

Entity A sells a machine to Entity B on 1 September 2021 for a total price of $4,000,000, which incorporates both the sale of the machine and supporting service. Due to the specialized nature of the machine, Entity A has additionally agreed to provide a supporting service for the next two years. The annual cost to Entity A of providing this service will be $300,000. Entity A usually earns a gross profit margin of 20% on such contracts.

REQUIRED:

Evaluate the revenue in Entity As Statement of Profit or Loss for the year ended 31 December 2021.

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