On 1 January 2017, Duke Ltd sold a machine to a customer for ‚¬400,000 with two years’ interest-free credit. The machine was delivered immediately to the customer on the same date. The ‚¬400,000 is payable to Duke Ltd on 31 December 2018. Duke Ltd has an enforceable right to payment over the two-year period. The relevant rate of interest is 8%. 

Required: Explain how this transaction should be accounted for by Duke Ltd in the financial statements for the years ended 31 December 2017 and 2018.

Answer rating: 100% (QA)

Duke Ltd would account for this transaction as a sal... View the full answer