On December 31, 2022, Golden Egg Company sells farming equipment to Feather Inc. for $50,000. Golden Egg includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2022. Golden Egg estimates the prices to be $48,800 for the equipment and $1,200 for the cost of warranty. Required Are the sale of the equipment and the warranty separate performance obligations within the contract? Explain. Prepare the journal entry to record this transaction on December 31, 2022. Ignore any related cost of goods sold entry. Repeat the requirements for part 2, assuming that, in addition to the assurance warranty, Golden Egg sold an extended warranty (service-type warranty) for an additional two years (2024–2025) for $800.

On December 31, 2022, Golden Egg Company sells farming equipment to Feather Inc. for $50,000. Golden Egg includes a one-year assurance warranty service with the sale of all its equipment. The customer receives and pays for the equipment on December 31, 2022. Golden Egg estimates the prices to be $48,800 for the equipment and $1,200 for the cost of warranty. Required Are the sale of the equipment and the warranty separate performance obligations within the contract? Explain. Prepare the journal entry to record this transaction on December 31, 2022. Ignore any related cost of goods sold entry. Repeat the requirements for part 2, assuming that, in addition to the assurance warranty, Golden Egg sold an extended warranty (service-type warranty) for an additional two years (2024–2025) for $800.

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

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 24E: Spath Company borrows 75,000 by issuing a 4-year, noninterest-bearing note to a customer on January...

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