January 1, 2018, Company A entered into a contract with a customer to sell a machine for
Question:
January 1, 2018, Company A entered into a contract with a customer to sell a machine for a total of $ 10,000. •Included in the contract is that Company A must provide training on the use of the machine as well maintenance of the machine for two years. •Another incentive in the contract was that Company A gave the customer a coupon worth $ 500 for future purchases.
•The machine has a normal selling price of $ 9,500.
•Company A normally includes the training on equipment it sells since it believes it is integral to the machine.
•However it estimates the training to be worth $ 500.
•Company A does not provide training on equipment they do not sell.
•The price of the two-year maintenance contract for the machine when sold separately is $1,500.
•The equipment was installed and the training provided on April 1, 2018.
•The customer used the coupon for another purchase on September 1, 2018.
•The $ 10,000 was received by Company A on April 30, 2018.
•Prepare the journal entries for Company A for the fiscal year end December 31, 2018 for the above transaction.
•IFRS is the constraint.
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts