Lam Refrigeration Ltd (LRT) specializing in design, supply, and installation of cold rooms, as well as maintenance and servicing of commercial and industrial refrigeration for supermarkets and other uses. For the month of February and March, the company did a sales promotion for its latest model of cold room design. On 1 March 20X2, the company entered into a contract to install a cold room for Economical Supermarket Pte Ltd for $47,000.00. The cold room comes with a 12-month warranty against defects (which is not sold separately).

The promotion also comes with the additional freebies:

• Extended one year warranty against defects

• 4 six-monthly maintenance and servicing

• 2 tickets to All-Stars Celebration Concert

The standalone selling prices of the freebies are:

• Extended one year warranty against defects = $600

• 4 six-monthly maintenance and servicing = $2,000

• 2 tickets to All-Stars Celebration Concert = $400

The installation was completed on 1 April 20X2, and the warranty started on the same day. The free concert tickets were also issued on that day. The first maintenance and servicing commence 1 September, 20X2.

Required:

(a) Apply FRS 115 Revenue from Contracts with Customers to account for the treatment of this transaction. Steps must be clearly explained, and workings are shown.
(b) Present the journal entries for the year 20X1.

Answer rating: 100% (QA)

As pen IFRS IIS the doscash slmpuce is apportmed on IFRS 115 the dtscash sel al senvices calcol... View the full answer