Sandhill Company manufactures equipment. Sandhill's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $225,000 to $1,500,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Sandhill has the following arrangement with Tamarisk Inc. ● Tamarisk purchases equipment from Sandhill on May 2, 2023, for a price of $1,034,000 and contracts with Sandhill to install the equipment. Sandhill charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sandhill determines that the installation service is estimated to have a fair value of $66,000. The cost of the equipment is $700,000. (a) Tamarisk is obligated to pay Sandhill the $968,000 on delivery of the equipment and the balance on the completion of the installation. Sandhill delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately. Your answer is correct. Allocate the transaction price of $1,034,000 among the performance obligations of the contract. Assume Sandhill follows IFRS. (Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.) Delivery equipment $ Installation $ 971960 62040
Sandhill Company manufactures equipment. Sandhill's products range from simple automated machinery to complex systems containing numerous components. Unit selling prices range from $225,000 to $1,500,000, and are quoted inclusive of installation. The installation process does not involve changes to the features of the equipment to perform to specifications. Sandhill has the following arrangement with Tamarisk Inc. ● Tamarisk purchases equipment from Sandhill on May 2, 2023, for a price of $1,034,000 and contracts with Sandhill to install the equipment. Sandhill charges the same price for the equipment irrespective of whether it does the installation or not. Using market data, Sandhill determines that the installation service is estimated to have a fair value of $66,000. The cost of the equipment is $700,000. (a) Tamarisk is obligated to pay Sandhill the $968,000 on delivery of the equipment and the balance on the completion of the installation. Sandhill delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume that the equipment and the installation are two distinct performance obligations that should be accounted for separately. Your answer is correct. Allocate the transaction price of $1,034,000 among the performance obligations of the contract. Assume Sandhill follows IFRS. (Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.) Delivery equipment $ Installation $ 971960 62040
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Prepare any journal entries for Sandhill on May 2, June 1, and September 30, 2023. (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the
amounts. Record journal entries in the order presented in the problem. List all debit entries before credit entries.)
e
2023
Account Titles and Explanation
Accounts Receivable
Cash
Unearned Revenue
Accounts Receivable
Service Revenue
(To record sales)
Cost of Goods Sold
Inventory
(To record cost of goods sold)
Cash
Accounts Receivable
Service Revenue
Debit
66000
62040
971960
700000
971960
Credit
700000
1034000
700000
909920
62040
Transcribed Image Text:Sandhill Company manufactures equipment. Sandhill's products range from simple automated machinery to complex systems
containing numerous components. Unit selling prices range from $225,000 to $1,500,000, and are quoted inclusive of installation. The
installation process does not involve changes to the features of the equipment to perform to specifications. Sandhill has the following
arrangement with Tamarisk Inc.
Tamarisk purchases equipment from Sandhill on May 2, 2023, for a price of $1,034,000 and contracts with Sandhill to install
the equipment. Sandhill charges the same price for the equipment irrespective of whether it does the installation or not. Using
market data, Sandhill determines that the installation service is estimated to have a fair value of $66,000. The cost of the
equipment is $700,000.
(a)
Tamarisk is obligated to pay Sandhill the $968,000 on delivery of the equipment and the balance on the completion of the
installation.
Sandhill delivers the equipment on June 1, 2023, and completes the installation of the equipment on September 30, 2023. Assume
that the equipment and the installation are two distinct performance obligations that should be accounted for separately.
Your answer is correct.
Allocate the transaction price of $1,034,000 among the performance obligations of the contract. Assume Sandhill follows IFRS.
(Round percentage allocations to 2 decimal places, e.g. 12.25% and final answers to O decimal places, e.g. 5,275.)
Delivery equipment $
Installation
$
971960
62040
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