Barnes Co. is a technology company which provides equipment, installation services as well as a full year of training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation, and training for a total cost of $144,000 on 3/15/24. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000, and $30,000 respectively. The journal entry to record the transaction on 3/15/24 will include a a. credit to Sales Revenue for $144,000. b. C. d. debit to Unearned Service Revenue of $24,000. credit to Unearned Service Revenue of $72,000. credit to Sales Revenue of $72,000.

Barnes Co. is a technology company which provides equipment, installation services as well as a full year of training. Customers can purchase any product or service separately or as a bundled package. Container Corporation purchased computer equipment, installation, and training for a total cost of $144,000 on 3/15/24. Estimated standalone fair values of the equipment, installation and training are $90,000, $60,000, and $30,000 respectively. The journal entry to record the transaction on 3/15/24 will include a a. credit to Sales Revenue for $144,000. b. C. d. debit to Unearned Service Revenue of $24,000. credit to Unearned Service Revenue of $72,000. credit to Sales Revenue of $72,000.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 19E: Rix Company sells home appliances and provides installation and service for its customers. On April...

See similar textbooks

Similar questions

Steele Corp. purchases equipment for $30,000. Regarding the purchase, Steele paid shipping of $1,200, paid installation fees of $2,750, pays annual maintenance cost of $250, and received a 10% discount on sales price. Determine the acquisition cost of the equipment.
A company provide equipment, installation services as well as training to its customers. Customers can purchase any product or service separately or as a bundled package. A customer purchased equipment, installation and training for a total cost of $189,600 on January 1, 2021. Estimated standalone fair values of the equipment, installation, and training are $100,000, $80,000, and $20,000 respectively. The transaction price allocated to installation is $___________.
On January 31, O’Malley Company contracted to have two products built by Taylor Manufacturing for a total of P185,000. The contract specifies that payment will only occur after both products have been transferred to O’Malley Company. O’Malley determines that the standalone prices areP100,000 for Product 1 and P85,000 for Product 2. On August 1, when Product1 has been transferred, the journal entry to record this event include a:a. Debit to Contract Assets for P85,000b. Debit to Contract Assets for P100,000 explain your answer
Steele Corp. purchases equipment for $21,000. Regarding the purchase, Steele recorded the following transactions: • Paid shipping of $1,200. • Paid installation fees of $2,400. • Pays annual maintenance cost of $260. • Received a 5% discount on $21,000 sales price. Determine the acquisition cost of the equipment.
Jillian Inc. manufactures and installs customized equipment. On January 1, 2021, Jillian entered into a contract to sell equipment to a client for $800,000. This amount included installation. The company normally charges an additional fee for its installation services, but in this case, the installation was "bundled" with the equipment. The standalone value of the machinery was $750,000 while the cost of the installation was estimated at $100,000. Jillian had the equipment in its inventory on January 1, 2021. The equipment, which had a cost of $600,000, was customized (at no cost Jillan), and delivered to the client and installed on that date. Payment terms are as follows: January 1, 2021: $80,000 upon contract signing and delivery and installation. December 31, 2021; Balance due. Jillian Inc. follows IFRS and estimates that the interest rate for a similar financing arrangement would be 6%. Required: a. Apply the steps of IFRS 15 Revenue Recognition to this transaction. State each step…
Fact Pattern: On November 1, Year 1, Iba Co. entered into a contract with a customer to sell 150 machines for 575 each. The customer obtains control of the machines at contract inception. Iba's cost of each machine is $45. Iba allows the customer to return any unused machine within 1 year from the sale date and recelve a full refund. Iba uses the expected value method to estimate the variable consideration. Based on Iba's experience and other relevant factors, it reasonably estimates that a total of 20 machines (12 machines in Year 1 and 8 machines in Year 2) will be returned. Iba estimates that (1) the machines are expected to be returned in salable condition and (2) the costs of recovering the machines will be immaterial. During Year 1, 10 machines were returned. At the end of Year 1, Iba continues to estimate that a total of 20 machines will be returned within 1 year from the sale date. What amount of revenue from this contract will be recognized by Iba in Year 17 $3,900 $9,750…
AGI software inc entered into a $250,000 contract with mcdonald company to transfer a software license, perform the related installation service and provide a tech support for three-year period. AGI sells the license to the software, installation service, and tech support as a bundle of product for a lump-sum price. the installation service and tech support could be performed by other entities and there is a ready market for those services. the stand-alone prices for software, installation service, and tech support service were 160,000 20,000 and 30,000 per year (i.e., total of 90,000 for three years) respectively. The contract was finalized on march 1 2020. AGI delivered the software license on april 1 2020 when its title was transferred to mcdonald. AGI completed installation on may 15 2020 at which point the tech support service will begin covering a period of three years. Upon installation of software on may 15, mcdonald paid for the software, installation service, and one-year…
Johnson Inc. enters into a $300,000 contract for the purchase of customized equipment with Builder Inc. The construction of the equipment is expected to take two years. Johnson Inc. owns the work in process during the two-year period but will not take possession of the equipment until completed. The contractor will bill Johnson monthly for performance completed to date. After year-one, Builder Inc. incurred costs of $120,000 and expects remaining costs to be $108,000. Builder Inc. has billed Johnson $150,000 in total for the year. Johnson has paid $135,000 to Builder Inc. Determine the amount of revenue and expenses that Builder Inc. should recognize in the first year of the contract.
Johnson Inc. enters into a $300,000 contract for the purchase of customized equipment with Builder Inc. The construction of the equipment is expected to take two years. Johnson Inc. owns the work in process during the two-year period but will not take possession of the equipment until completed. The contractor will bill Johnson monthly for performance completed to date. After year-one, Builder Inc. incurred costs of $120,000 and expects remaining costs to be $108,000. Builder Inc. has billed Johnson $150,000 in total for the year. Johnson has paid $135,000 to Builder Inc. Determine the amount of revenue and expenses that Builder Inc. should recognize in the first year of the contract. a. Revenue Expenses $157,895 $120,000 b. Revenue Expenses $150,000 $114,000 c. Revenue Expenses $78,947 $120,000 d. Revenue Expenses $0 $0 e. Revenue Expenses $150,000 $120,000
UMPI Corporation purchased conveyor equipment with a list price of $15,000. Presented below are three independent cases related to the equipment. (Round to the nearest dollar.) Instructions: Prepare the general journal entries required to record the acquisition and payment in each of the independent cases below. 6.1 UMPI paid cash for the equipment 8 days after the purchase. The vendor’s credit terms are 2/10, n/30. Assume that equipment purchases are initially recorded gross. 6.2 UMPI traded in equipment with a book value of $2,000 (initial cost $8,000), and paid $8,500 in cash. The old equipment could have been sold for $1,400 at the date of trade. (The exchange did have commercial substance.) 6.3 UMPI signed an interest-bearing note for the equipment on the date of purchase. The note was due in one year and was paid on time.
An full-service technology company provides equipment, installation services as well as training. Customers can purchase any product or service separately or as a bundled package. A Customer purchased computer equipment, installation and training for a total cost of P150,000 on May 22, 2021. Estimated stand alone selling price of the equipment, training and installation are P100,000, P90,000 and P60,000 respectively. How much is the transaction price allocated to the installation?
Sheridan Company incurs the following costs in purchasing equipment: invoice price, $40,500; shipping, $1,025; installation and testing, $1,600; one-year insurance policy, $2,750.What is the cost of the equipment?