Question
(a) Kaher Sdn Bhd (Kaher) is a manufacturer of steam vacuum cleaner in Malaysia. On 1 July 2021, Kaher entered into a contract with
(a) Kaher Sdn Bhd (Kaher) is a manufacturer of steam vacuum cleaner in Malaysia. On 1 July 2021, Kaher entered into a contract with its dealer, Sugeme Sdn Bhd (Sugeme) to sell 100 units of steam vacuum cleaners. The details of the steam vacuum cleaner is as follows: Selling price per unit RM4,200 Cost per unit RM2,200 A clause stated in the contract that if customers purchase the steam vacuum cleaners from Sugeme, the customers have an option to purchase a three-year warranty and service guarantee from Kaher at a price of RM1,200 per unit. Kaher's past experience with sales of the steam vacuum cleaner was that all customers will opt for the warranty and service guarantee. On 1 September 2021, Sugeme sold 100 units of steam vacuum cleaners to its customers. The selling price per unit is RM6,000. All customers paid the additional RM1,200 per unit for the three-year warranty and service guarantee. Required: Apply IFRS 15/MFRS 15 Revenue from Contracts with Customers to discuss the correct accounting treatment in the books of: (i) Kaher for sales of steam vacuum cleaners on 1 July 2021. (ii) Sugeme for purchases of steam vacuum cleaners on 1 July 2021. (Note: Show all relevant journal entries in your discussion)
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