Ace Enterprises manufactures specialized medical equipment. Premium Health purchases equipment from Ace on October 15, 2021 for $500,000. This price includes installation. Using available information, Ace determines that the installation service is estimated to have a fair value of $30,000. The sale price of the equipment without installation would be $490,000. The cost of the equipment is $300,000.

Premium has agreed to pay Ace $400,000 upon delivery of the equipment and the balance when the equipment is installed.

Ace delivers the equipment on November 15, 2021 and completes installation on November 30, 2021.

Required:

Answer this question using IFRS revenue recognition (five-step process) criteria and the CPA Handbook. Create a table with 3 columns as follows:

Step

CPA Handbook section and paragraph

Analysis using question information

1. Using the format as in the table above and the five step process for revenue recognition, determine when and how much revenue would be recognized by Ace.
2. Prepare the journal entries for Ace.