AA maritime industries, inc. is a manufacturer of bridge simulator used in the maritime school. the company's products range from varied range of machineries and equipment. the selling price of their units varies depending on the unit involved with a range of 6,000,000 to 60,000,000 and are quoted inclusive of installation and training, if there is a need. the installation does not involve any modification as to the original specifications. aa inc. has the following arrangement with TT's maritime college: TT purchases bridge simulator from AA at a price of 40,740,000 and prefer AA to do the installation and TT agreed on such agreements. The price of the installation service is estimated to have a fair value of 840,000. The fair value of the training sessions is estimated at 420,000. TT is obligated to pay AA Inc. the 40,740,000 upon the delivery and installation of the bridge simulator. AA delivers the bridge simulator on September 1, 20x7, and completes the installation on November 1, 20x7. Training related to the bridge simulator starts once the installation is completed and lasts for 4 months. The bridge simulator has a useful life of 15 years. How much is the total fair value of the bridge simulator? Prepare the journal entries necessary on November 1, 20x7. Prepare the journal entries necessary on December 31, 20x7.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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AA maritime industries, inc. is a manufacturer of bridge simulator used in the maritime school. the company's products range from varied range of machineries and equipment. the selling price of their units varies depending on the unit involved with a range of 6,000,000 to 60,000,000 and are quoted inclusive of installation and training, if there is a need. the installation does not involve any modification as to the original specifications. aa inc. has the following arrangement with TT's maritime college:

TT purchases bridge simulator from AA at a price of 40,740,000 and prefer AA to do the installation and TT agreed on such agreements. The price of the installation service is estimated to have a fair value of 840,000.
The fair value of the training sessions is estimated at 420,000.
TT is obligated to pay AA Inc. the 40,740,000 upon the delivery and installation of the bridge simulator.
AA delivers the bridge simulator on September 1, 20x7, and completes the installation on November 1, 20x7. Training related to the bridge simulator starts once the installation is completed and lasts for 4 months. The bridge simulator has a useful life of 15 years.

How much is the total fair value of the bridge simulator?
Prepare the journal entries necessary on November 1, 20x7.
Prepare the journal entries necessary on December 31, 20x7.

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